Correlation Between Thornburg Low and Thornburg International

Can any of the company-specific risk be diversified away by investing in both Thornburg Low 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 Low 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 Low Duration and Thornburg International Growth, you can compare the effects of market volatilities on Thornburg Low 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 Low with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Low and Thornburg International.

Diversification Opportunities for Thornburg Low and Thornburg International

-0.74

Correlation Coefficient

Thornburg Low  Thornburg International

Pay attention - limited upside

The 3 months correlation between Thornburg and Thornburg is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Low Duration and Thornburg International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Thornburg Low 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 Low Duration 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 Low i.e., Thornburg Low and Thornburg International go up and down completely randomly.

Pair Corralation between Thornburg Low and Thornburg International

Assuming the 90 days horizon Thornburg Low is expected to generate 1.06 times less return on investment than Thornburg International. But when comparing it to its historical volatility, Thornburg Low Duration is 8.73 times less risky than Thornburg International. It trades about 0.21 of its potential returns per unit of risk. Thornburg International Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,370  in Thornburg International Growth on September 14, 2024 and sell it today you would earn a total of  124.00  from holding Thornburg International Growth or generate 5.23% return on investment over 90 days.

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

Thornburg Low Duration  vs.  Thornburg International Growth

Thornburg Low Duration

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Low Duration are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg Low 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

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 latest weak performance, the Fund's technical and fundamental 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 Low and Thornburg International

The main advantage of trading using opposite Thornburg Low and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Low 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 Low Duration and Thornburg International Growth 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.