Correlation Between Thornburg International and Dynamic International

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

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

Diversification Opportunities for Thornburg International and Dynamic International

0.45

Correlation Coefficient

Thornburg International  Dynamic International

Very weak diversification

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

Pair Corralation between Thornburg International and Dynamic International

Assuming the 90 days horizon Thornburg International Growth is expected to generate 0.41 times more return on investment than Dynamic International. However, Thornburg International Growth is 2.46 times less risky than Dynamic International. It trades about -0.23 of its potential returns per unit of risk. Dynamic International Opportunity is currently generating about -0.25 per unit of risk. If you would invest  2,391  in Thornburg International Growth on October 10, 2024 and sell it today you would lose (83.00) from holding Thornburg International Growth or give up 3.47% of portfolio value over 90 days.

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

Thornburg International Growth  vs.  Dynamic International Opportun

Thornburg International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg International Growth 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 basic 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.

Dynamic International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynamic International Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Dynamic International

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

The idea behind Thornburg International Growth and Dynamic International Opportunity 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.