Correlation Between Thornburg International and Perkins Mid

Can any of the company-specific risk be diversified away by investing in both Thornburg International and Perkins Mid 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 International and Perkins Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thornburg International Value and Perkins Mid Cap, you can compare the effects of market volatilities on Thornburg International and Perkins Mid 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 International with a short position of Perkins Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg International and Perkins Mid.

Diversification Opportunities for Thornburg International and Perkins Mid

0.45

Correlation Coefficient

Thornburg International  Perkins Mid

Very weak diversification

The 3 months correlation between Thornburg and Perkins is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg International Value and Perkins Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Mid Cap and Thornburg International 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 International Value are associated (or correlated) with Perkins Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Mid Cap has no effect on the direction of Thornburg International i.e., Thornburg International and Perkins Mid go up and down completely randomly.

Pair Corralation between Thornburg International and Perkins Mid

Assuming the 90 days horizon Thornburg International Value is expected to generate 0.31 times more return on investment than Perkins Mid. However, Thornburg International Value is 3.23 times less risky than Perkins Mid. It trades about -0.37 of its potential returns per unit of risk. Perkins Mid Cap is currently generating about -0.34 per unit of risk. If you would invest  2,238  in Thornburg International Value on October 6, 2024 and sell it today you would lose (108.00) from holding Thornburg International Value or give up 4.83% of portfolio value over 90 days.

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

Thornburg International Value  vs.  Perkins Mid Cap

Thornburg International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Perkins Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perkins Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Thornburg International and Perkins Mid

The main advantage of trading using opposite Thornburg International and Perkins Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg International position performs unexpectedly, Perkins Mid 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 Perkins Mid will offset losses from the drop in Perkins Mid's long position.

The idea behind Thornburg International Value and Perkins Mid Cap 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.