Correlation Between Thrivent Diversified and Royce International

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

By analyzing existing cross correlation between Thrivent Diversified Income and Royce International Small Cap, you can compare the effects of market volatilities on Thrivent Diversified and Royce 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 Thrivent Diversified with a short position of Royce International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Diversified and Royce International.

Diversification Opportunities for Thrivent Diversified and Royce International

0.27

Correlation Coefficient

Thrivent Diversified  Royce International

Modest diversification

The 3 months correlation between Thrivent and Royce is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Diversified Income and Royce International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce International and Thrivent Diversified 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 Thrivent Diversified Income are associated (or correlated) with Royce International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce International has no effect on the direction of Thrivent Diversified i.e., Thrivent Diversified and Royce International go up and down completely randomly.

Pair Corralation between Thrivent Diversified and Royce International

Assuming the 90 days horizon Thrivent Diversified Income is expected to generate 0.37 times more return on investment than Royce International. However, Thrivent Diversified Income is 2.69 times less risky than Royce International. It trades about -0.35 of its potential returns per unit of risk. Royce International Small Cap is currently generating about -0.22 per unit of risk. If you would invest  723.00  in Thrivent Diversified Income on October 10, 2024 and sell it today you would lose (15.00) from holding Thrivent Diversified Income or give up 2.07% of portfolio value over 90 days.

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

Thrivent Diversified Income  vs.  Royce International Small Cap

Thrivent Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thrivent Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Thrivent Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Royce International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royce International Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Royce 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 Thrivent Diversified and Royce International

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

The idea behind Thrivent Diversified Income and Royce International Small Cap 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.