Correlation Between Thrivent High and Bread Financial

Can any of the company-specific risk be diversified away by investing in both Thrivent High and Bread Financial 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 Bread Financial 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 Bread Financial Holdings, you can compare the effects of market volatilities on Thrivent High and Bread Financial 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 Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Bread Financial.

Diversification Opportunities for Thrivent High and Bread Financial

0.32

Correlation Coefficient

Thrivent High  Bread Financial

Weak diversification

The 3 months correlation between Thrivent and Bread is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings 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 Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Thrivent High i.e., Thrivent High and Bread Financial go up and down completely randomly.

Pair Corralation between Thrivent High and Bread Financial

Assuming the 90 days horizon Thrivent High Yield is expected to under-perform the Bread Financial. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent High Yield is 20.1 times less risky than Bread Financial. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Bread Financial Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,258  in Bread Financial Holdings on October 6, 2024 and sell it today you would earn a total of  930.00  from holding Bread Financial Holdings or generate 17.69% 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.  Bread Financial Holdings

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.

Bread Financial Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bread Financial Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Bread Financial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Bread Financial

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

The idea behind Thrivent High Yield and Bread Financial Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.