Correlation Between Adams Diversified and Thrivent Moderate

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

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

Diversification Opportunities for Adams Diversified and Thrivent Moderate

0.86

Correlation Coefficient

Adams Diversified  Thrivent Moderate

Very poor diversification

The 3 months correlation between Adams and Thrivent is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Thrivent Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Moderate and Adams 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 Adams Diversified Equity are associated (or correlated) with Thrivent Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Moderate has no effect on the direction of Adams Diversified i.e., Adams Diversified and Thrivent Moderate go up and down completely randomly.

Pair Corralation between Adams Diversified and Thrivent Moderate

Considering the 90-day investment horizon Adams Diversified Equity is expected to under-perform the Thrivent Moderate. In addition to that, Adams Diversified is 1.6 times more volatile than Thrivent Moderate Allocation. It trades about -0.07 of its total potential returns per unit of risk. Thrivent Moderate Allocation is currently generating about -0.06 per unit of volatility. If you would invest  1,564  in Thrivent Moderate Allocation on December 29, 2024 and sell it today you would lose (36.00) from holding Thrivent Moderate Allocation or give up 2.3% of portfolio value over 90 days.

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

Adams Diversified Equity  vs.  Thrivent Moderate Allocation

Adams Diversified Equity

Risk-Adjusted Performance

Very Weak

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

Thrivent Moderate

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Adams Diversified and Thrivent Moderate

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

The idea behind Adams Diversified Equity and Thrivent Moderate Allocation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.