Correlation Between Thrivent High and Bentley Systems

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

Diversification Opportunities for Thrivent High and Bentley Systems

0.27

Correlation Coefficient

Thrivent High  Bentley Systems

Modest diversification

The 3 months correlation between Thrivent and Bentley is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Bentley Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentley Systems 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 Bentley Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentley Systems has no effect on the direction of Thrivent High i.e., Thrivent High and Bentley Systems go up and down completely randomly.

Pair Corralation between Thrivent High and Bentley Systems

Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.13 times more return on investment than Bentley Systems. However, Thrivent High Yield is 7.42 times less risky than Bentley Systems. It trades about -0.24 of its potential returns per unit of risk. Bentley Systems is currently generating about -0.17 per unit of risk. If you would invest  427.00  in Thrivent High Yield on October 6, 2024 and sell it today you would lose (4.00) from holding Thrivent High Yield or give up 0.94% of portfolio value over 90 days.

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

Thrivent High Yield  vs.  Bentley Systems

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.

Bentley Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bentley Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bentley Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thrivent High and Bentley Systems

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

The idea behind Thrivent High Yield and Bentley Systems 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.