Correlation Between Thrivent High and BP PLC

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

Diversification Opportunities for Thrivent High and BP PLC

-0.23

Correlation Coefficient

Thrivent High  BP PLC

Very good diversification

The 3 months correlation between Thrivent and BP PLC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Thrivent High i.e., Thrivent High and BP PLC go up and down completely randomly.

Pair Corralation between Thrivent High and BP PLC

Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.13 times more return on investment than BP PLC. However, Thrivent High Yield is 7.61 times less risky than BP PLC. It trades about 0.18 of its potential returns per unit of risk. BP PLC ADR is currently generating about -0.1 per unit of risk. If you would invest  405.00  in Thrivent High Yield on September 20, 2024 and sell it today you would earn a total of  18.00  from holding Thrivent High Yield or generate 4.44% return on investment over 90 days.

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

Thrivent High Yield  vs.  BP PLC ADR

Thrivent High Yield

Risk-Adjusted Performance

0 of 100

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.

BP PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Thrivent High and BP PLC

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

The idea behind Thrivent High Yield and BP PLC ADR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.