Correlation Between Thrivent High and DTF Tax

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

Diversification Opportunities for Thrivent High and DTF Tax

0.85

Correlation Coefficient

Thrivent High  DTF Tax

Very poor diversification

The 3 months correlation between Thrivent and DTF is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and DTF Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTF Tax Free 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 DTF Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTF Tax Free has no effect on the direction of Thrivent High i.e., Thrivent High and DTF Tax go up and down completely randomly.

Pair Corralation between Thrivent High and DTF Tax

Assuming the 90 days horizon Thrivent High is expected to generate 1.39 times less return on investment than DTF Tax. But when comparing it to its historical volatility, Thrivent High Yield is 2.17 times less risky than DTF Tax. It trades about 0.1 of its potential returns per unit of risk. DTF Tax Free is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,117  in DTF Tax Free on November 29, 2024 and sell it today you would earn a total of  18.00  from holding DTF Tax Free or generate 1.61% return on investment over 90 days.

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

Thrivent High Yield  vs.  DTF Tax Free

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 7 (%) 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.

DTF Tax Free

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DTF Tax Free are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DTF Tax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Thrivent High and DTF Tax

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

The idea behind Thrivent High Yield and DTF Tax Free 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.