Correlation Between Thornburg Limited and Thornburg International

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

Diversification Opportunities for Thornburg Limited and Thornburg International

0.68

Correlation Coefficient

Thornburg Limited  Thornburg International

Poor diversification

The 3 months correlation between Thornburg and Thornburg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Limited Term 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 Limited 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 Limited Term 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 Limited i.e., Thornburg Limited and Thornburg International go up and down completely randomly.

Pair Corralation between Thornburg Limited and Thornburg International

Assuming the 90 days horizon Thornburg Limited Term is expected to generate 0.18 times more return on investment than Thornburg International. However, Thornburg Limited Term is 5.45 times less risky than Thornburg International. It trades about -0.17 of its potential returns per unit of risk. Thornburg International Value is currently generating about -0.24 per unit of risk. If you would invest  1,310  in Thornburg Limited Term on September 29, 2024 and sell it today you would lose (24.00) from holding Thornburg Limited Term or give up 1.83% of portfolio value over 90 days.

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

Thornburg Limited Term  vs.  Thornburg International Value

Thornburg Limited Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Thornburg Limited and Thornburg International

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

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.