Correlation Between Thrivent High and Orsted AS

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

Diversification Opportunities for Thrivent High and Orsted AS

-0.16

Correlation Coefficient

Thrivent High  Orsted AS

Good diversification

The 3 months correlation between Thrivent and Orsted is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Orsted AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS 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 Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS ADR has no effect on the direction of Thrivent High i.e., Thrivent High and Orsted AS go up and down completely randomly.

Pair Corralation between Thrivent High and Orsted AS

Assuming the 90 days horizon Thrivent High is expected to generate 1.53 times less return on investment than Orsted AS. But when comparing it to its historical volatility, Thrivent High Yield is 12.94 times less risky than Orsted AS. It trades about 0.09 of its potential returns per unit of risk. Orsted AS ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,509  in Orsted AS ADR on December 30, 2024 and sell it today you would lose (10.00) from holding Orsted AS ADR or give up 0.66% of portfolio value over 90 days.

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

Thrivent High Yield  vs.  Orsted AS ADR

Thrivent High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 6 (%) 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.

Orsted AS ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orsted AS ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Orsted AS 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 Orsted AS

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

The idea behind Thrivent High Yield and Orsted AS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.