Correlation Between Thrivent Diversified and Sterling Capital

Can any of the company-specific risk be diversified away by investing in both Thrivent Diversified and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on Thrivent Diversified and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Diversified and Sterling Capital.

Diversification Opportunities for Thrivent Diversified and Sterling Capital

0.35

Correlation Coefficient

Thrivent Diversified  Sterling Capital

Weak diversification

The 3 months correlation between Thrivent and Sterling is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Diversified Income and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Thrivent Diversified i.e., Thrivent Diversified and Sterling Capital go up and down completely randomly.

Pair Corralation between Thrivent Diversified and Sterling Capital

Assuming the 90 days horizon Thrivent Diversified Income is expected to generate 0.11 times more return on investment than Sterling Capital. However, Thrivent Diversified Income is 9.44 times less risky than Sterling Capital. It trades about 0.06 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about -0.12 per unit of risk. If you would invest  707.00  in Thrivent Diversified Income on October 26, 2024 and sell it today you would earn a total of  7.00  from holding Thrivent Diversified Income or generate 0.99% return on investment over 90 days.

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

Thrivent Diversified Income  vs.  Sterling Capital Stratton

Thrivent Diversified

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Diversified Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Sterling Capital Stratton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Stratton 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 basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Thrivent Diversified and Sterling Capital

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

The idea behind Thrivent Diversified Income and Sterling Capital Stratton 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.