Correlation Between Thrivent High and Aspen Technology

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

By analyzing existing cross correlation between Thrivent High Yield and Aspen Technology, you can compare the effects of market volatilities on Thrivent High and Aspen Technology 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 High with a short position of Aspen Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Aspen Technology.

Diversification Opportunities for Thrivent High and Aspen Technology

0.24

Correlation Coefficient

Thrivent High  Aspen Technology

Modest diversification

The 3 months correlation between Thrivent and Aspen is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and Thrivent High 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 High Yield are associated (or correlated) with Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Thrivent High i.e., Thrivent High and Aspen Technology go up and down completely randomly.

Pair Corralation between Thrivent High and Aspen Technology

Assuming the 90 days horizon Thrivent High Yield is expected to under-perform the Aspen Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent High Yield is 3.44 times less risky than Aspen Technology. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Aspen Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  24,993  in Aspen Technology on October 6, 2024 and sell it today you would earn a total of  101.00  from holding Aspen Technology or generate 0.4% return on investment over 90 days.

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

Thrivent High Yield  vs.  Aspen Technology

Thrivent High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aspen Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Aspen Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thrivent High and Aspen Technology

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

The idea behind Thrivent High Yield and Aspen Technology 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.