Correlation Between Thrivent Large and Thrivent Balanced

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

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

Diversification Opportunities for Thrivent Large and Thrivent Balanced

0.8

Correlation Coefficient

Thrivent Large  Thrivent Balanced

Very poor diversification

The 3 months correlation between Thrivent and Thrivent is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Large Cap and Thrivent Balanced Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Balanced Income and Thrivent Large 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 Large Cap are associated (or correlated) with Thrivent Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Balanced Income has no effect on the direction of Thrivent Large i.e., Thrivent Large and Thrivent Balanced go up and down completely randomly.

Pair Corralation between Thrivent Large and Thrivent Balanced

Assuming the 90 days horizon Thrivent Large Cap is expected to generate 2.18 times more return on investment than Thrivent Balanced. However, Thrivent Large is 2.18 times more volatile than Thrivent Balanced Income. It trades about 0.14 of its potential returns per unit of risk. Thrivent Balanced Income is currently generating about 0.15 per unit of risk. If you would invest  2,897  in Thrivent Large Cap on September 1, 2024 and sell it today you would earn a total of  171.00  from holding Thrivent Large Cap or generate 5.9% return on investment over 90 days.

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

Thrivent Large Cap  vs.  Thrivent Balanced Income

Thrivent Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Large Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Thrivent Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thrivent Balanced Income

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Balanced Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Thrivent Balanced 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 Large and Thrivent Balanced

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

The idea behind Thrivent Large Cap and Thrivent Balanced Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.