Correlation Between Thrivent Small and Bridge Builder

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

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

Diversification Opportunities for Thrivent Small and Bridge Builder

0.92

Correlation Coefficient

Thrivent Small  Bridge Builder

Almost no diversification

The 3 months correlation between Thrivent and Bridge is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Small Cap and Bridge Builder Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Large and Thrivent Small 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 Small Cap are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Large has no effect on the direction of Thrivent Small i.e., Thrivent Small and Bridge Builder go up and down completely randomly.

Pair Corralation between Thrivent Small and Bridge Builder

Assuming the 90 days horizon Thrivent Small Cap is expected to under-perform the Bridge Builder. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent Small Cap is 1.11 times less risky than Bridge Builder. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Bridge Builder Large is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,557  in Bridge Builder Large on December 30, 2024 and sell it today you would lose (194.00) from holding Bridge Builder Large or give up 7.59% of portfolio value over 90 days.

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

Thrivent Small Cap  vs.  Bridge Builder Large

Thrivent Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Bridge Builder Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridge Builder Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Thrivent Small and Bridge Builder

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

The idea behind Thrivent Small Cap and Bridge Builder Large 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.