Correlation Between Thornburg New and Thornburg International

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

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

Diversification Opportunities for Thornburg New and Thornburg International

0.7

Correlation Coefficient

Thornburg New  Thornburg International

Poor diversification

The 3 months correlation between Thornburg and Thornburg is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg New Mexico and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Thornburg New 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 New Mexico are associated (or correlated) with Thornburg International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg International has no effect on the direction of Thornburg New i.e., Thornburg New and Thornburg International go up and down completely randomly.

Pair Corralation between Thornburg New and Thornburg International

Assuming the 90 days horizon Thornburg New is expected to generate 12.8 times less return on investment than Thornburg International. But when comparing it to its historical volatility, Thornburg New Mexico is 5.68 times less risky than Thornburg International. It trades about 0.1 of its potential returns per unit of risk. Thornburg International Value is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,613  in Thornburg International Value on December 23, 2024 and sell it today you would earn a total of  314.00  from holding Thornburg International Value or generate 12.02% return on investment over 90 days.

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

Thornburg New Mexico  vs.  Thornburg International Value

Thornburg New Mexico

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg New Mexico are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Thornburg New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg International Value are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Thornburg International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thornburg New and Thornburg International

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

The idea behind Thornburg New Mexico and Thornburg International Value 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.