Correlation Between Europac Gold and Thrivent Government

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

By analyzing existing cross correlation between Europac Gold Fund and Thrivent Government Bond, you can compare the effects of market volatilities on Europac Gold and Thrivent Government 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 Europac Gold with a short position of Thrivent Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Thrivent Government.

Diversification Opportunities for Europac Gold and Thrivent Government

-0.17

Correlation Coefficient

Europac Gold  Thrivent Government

Good diversification

The 3 months correlation between Europac and Thrivent is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Thrivent Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Government Bond and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Thrivent Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Government Bond has no effect on the direction of Europac Gold i.e., Europac Gold and Thrivent Government go up and down completely randomly.

Pair Corralation between Europac Gold and Thrivent Government

Assuming the 90 days horizon Europac Gold Fund is expected to generate 6.38 times more return on investment than Thrivent Government. However, Europac Gold is 6.38 times more volatile than Thrivent Government Bond. It trades about 0.06 of its potential returns per unit of risk. Thrivent Government Bond is currently generating about -0.07 per unit of risk. If you would invest  1,047  in Europac Gold Fund on September 1, 2024 and sell it today you would earn a total of  66.00  from holding Europac Gold Fund or generate 6.3% return on investment over 90 days.

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

Europac Gold Fund  vs.  Thrivent Government Bond

Europac Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Europac Gold Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europac Gold may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Thrivent Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Europac Gold and Thrivent Government

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

The idea behind Europac Gold Fund and Thrivent Government Bond 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.