Correlation Between Thornburg Core and Causeway Emerging

Can any of the company-specific risk be diversified away by investing in both Thornburg Core and Causeway Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thornburg Core and Causeway Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thornburg E Growth and Causeway Emerging Markets, you can compare the effects of market volatilities on Thornburg Core and Causeway Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thornburg Core with a short position of Causeway Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Core and Causeway Emerging.

Diversification Opportunities for Thornburg Core and Causeway Emerging

-0.27

Correlation Coefficient

Thornburg Core  Causeway Emerging

Very good diversification

The 3 months correlation between Thornburg and Causeway is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg E Growth and Causeway Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Emerging Markets and Thornburg Core is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thornburg E Growth are associated (or correlated) with Causeway Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Emerging Markets has no effect on the direction of Thornburg Core i.e., Thornburg Core and Causeway Emerging go up and down completely randomly.

Pair Corralation between Thornburg Core and Causeway Emerging

Assuming the 90 days horizon Thornburg E Growth is expected to generate 1.3 times more return on investment than Causeway Emerging. However, Thornburg Core is 1.3 times more volatile than Causeway Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. Causeway Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest  2,369  in Thornburg E Growth on October 26, 2024 and sell it today you would earn a total of  909.00  from holding Thornburg E Growth or generate 38.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Thornburg E Growth  vs.  Causeway Emerging Markets

Thornburg E Growth

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg E Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Thornburg Core may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Causeway Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Causeway Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Causeway Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thornburg Core and Causeway Emerging

The main advantage of trading using opposite Thornburg Core and Causeway Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Core position performs unexpectedly, Causeway Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Causeway Emerging will offset losses from the drop in Causeway Emerging's long position.

The idea behind Thornburg E Growth and Causeway Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.