Correlation Between Thrivent High and Federated Investors

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

Diversification Opportunities for Thrivent High and Federated Investors

0.35

Correlation Coefficient

Thrivent High  Federated Investors

Weak diversification

The 3 months correlation between Thrivent and Federated is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors 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 Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of Thrivent High i.e., Thrivent High and Federated Investors go up and down completely randomly.

Pair Corralation between Thrivent High and Federated Investors

Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.2 times more return on investment than Federated Investors. However, Thrivent High Yield is 5.04 times less risky than Federated Investors. It trades about -0.23 of its potential returns per unit of risk. Federated Investors B is currently generating about -0.18 per unit of risk. If you would invest  425.00  in Thrivent High Yield on September 27, 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.  Federated Investors B

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.

Federated Investors

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Federated Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thrivent High and Federated Investors

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

The idea behind Thrivent High Yield and Federated Investors B 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.