Correlation Between Victory Tax and Thrivent Natural

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

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

Diversification Opportunities for Victory Tax and Thrivent Natural

0.26

Correlation Coefficient

Victory Tax  Thrivent Natural

Modest diversification

The 3 months correlation between Victory and Thrivent is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Victory Tax Exempt Fund and Thrivent Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Natural Res and Victory Tax 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 Victory Tax Exempt Fund are associated (or correlated) with Thrivent Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Natural Res has no effect on the direction of Victory Tax i.e., Victory Tax and Thrivent Natural go up and down completely randomly.

Pair Corralation between Victory Tax and Thrivent Natural

Assuming the 90 days horizon Victory Tax Exempt Fund is expected to under-perform the Thrivent Natural. But the mutual fund apears to be less risky and, when comparing its historical volatility, Victory Tax Exempt Fund is 1.13 times less risky than Thrivent Natural. The mutual fund trades about -0.36 of its potential returns per unit of risk. The Thrivent Natural Resources is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,005  in Thrivent Natural Resources on October 10, 2024 and sell it today you would lose (11.00) from holding Thrivent Natural Resources or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Victory Tax Exempt Fund  vs.  Thrivent Natural Resources

Victory Tax Exempt

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thrivent Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Victory Tax and Thrivent Natural

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

The idea behind Victory Tax Exempt Fund and Thrivent Natural Resources 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.