Correlation Between Federated Total and Thrivent Income

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

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

Diversification Opportunities for Federated Total and Thrivent Income

0.99

Correlation Coefficient

Federated Total  Thrivent Income

No risk reduction

The 3 months correlation between FEDERATED and Thrivent is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Thrivent Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Income and Federated Total 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 Federated Total Return are associated (or correlated) with Thrivent Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Income has no effect on the direction of Federated Total i.e., Federated Total and Thrivent Income go up and down completely randomly.

Pair Corralation between Federated Total and Thrivent Income

Assuming the 90 days horizon Federated Total is expected to generate 1.49 times less return on investment than Thrivent Income. But when comparing it to its historical volatility, Federated Total Return is 1.13 times less risky than Thrivent Income. It trades about 0.04 of its potential returns per unit of risk. Thrivent Income Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  803.00  in Thrivent Income Fund on November 20, 2024 and sell it today you would earn a total of  9.00  from holding Thrivent Income Fund or generate 1.12% return on investment over 90 days.

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

Federated Total Return  vs.  Thrivent Income Fund

Federated Total Return

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Total Return are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Federated Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thrivent Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Income Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Total and Thrivent Income

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

The idea behind Federated Total Return and Thrivent Income Fund 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.