Correlation Between Tcw Total and Thornburg International

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

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

Diversification Opportunities for Tcw Total and Thornburg International

0.7

Correlation Coefficient

Tcw Total  Thornburg International

Poor diversification

The 3 months correlation between Tcw and Thornburg is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tcw Total Return and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Tcw Total 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 Tcw Total Return 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 Tcw Total i.e., Tcw Total and Thornburg International go up and down completely randomly.

Pair Corralation between Tcw Total and Thornburg International

Assuming the 90 days horizon Tcw Total Return is expected to generate 0.4 times more return on investment than Thornburg International. However, Tcw Total Return is 2.48 times less risky than Thornburg International. It trades about -0.18 of its potential returns per unit of risk. Thornburg International Value is currently generating about -0.2 per unit of risk. If you would invest  838.00  in Tcw Total Return on September 25, 2024 and sell it today you would lose (38.00) from holding Tcw Total Return or give up 4.53% of portfolio value over 90 days.

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

Tcw Total Return  vs.  Thornburg International Value

Tcw Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tcw Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tcw Total 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 Value 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 Tcw Total and Thornburg International

The main advantage of trading using opposite Tcw Total and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tcw Total 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 Tcw Total Return 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.