Correlation Between Thrivent High and ChoiceOne Financial

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

Diversification Opportunities for Thrivent High and ChoiceOne Financial

0.46

Correlation Coefficient

Thrivent High  ChoiceOne Financial

Very weak diversification

The 3 months correlation between Thrivent and ChoiceOne is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial 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 ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of Thrivent High i.e., Thrivent High and ChoiceOne Financial go up and down completely randomly.

Pair Corralation between Thrivent High and ChoiceOne Financial

Assuming the 90 days horizon Thrivent High is expected to generate 17.31 times less return on investment than ChoiceOne Financial. But when comparing it to its historical volatility, Thrivent High Yield is 13.45 times less risky than ChoiceOne Financial. It trades about 0.13 of its potential returns per unit of risk. ChoiceOne Financial Services is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,042  in ChoiceOne Financial Services on September 5, 2024 and sell it today you would earn a total of  662.00  from holding ChoiceOne Financial Services or generate 21.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Thrivent High Yield  vs.  ChoiceOne Financial Services

Thrivent High Yield

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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.

ChoiceOne Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ChoiceOne Financial Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, ChoiceOne Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and ChoiceOne Financial

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

The idea behind Thrivent High Yield and ChoiceOne Financial Services 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.