Correlation Between United States and Thornburg International

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

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

Diversification Opportunities for United States and Thornburg International

0.49

Correlation Coefficient

United States  Thornburg International

Very weak diversification

The 3 months correlation between United and Thornburg is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding United States Copper and Thornburg International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and United States 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 United States Copper 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 United States i.e., United States and Thornburg International go up and down completely randomly.

Pair Corralation between United States and Thornburg International

Given the investment horizon of 90 days United States Copper is expected to generate 2.19 times more return on investment than Thornburg International. However, United States is 2.19 times more volatile than Thornburg International Growth. It trades about 0.33 of its potential returns per unit of risk. Thornburg International Growth is currently generating about -0.39 per unit of risk. If you would invest  2,553  in United States Copper on January 20, 2024 and sell it today you would earn a total of  225.00  from holding United States Copper or generate 8.81% return on investment over 90 days.

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

United States Copper  vs.  Thornburg International Growth

United States Copper

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United States Copper are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, United States reported solid returns over the last few months and may actually be approaching a breakup point.

Thornburg International

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with United States and Thornburg International

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

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.