Correlation Between Thrivent High and Grocery Outlet

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

Diversification Opportunities for Thrivent High and Grocery Outlet

0.45

Correlation Coefficient

Thrivent High  Grocery Outlet

Very weak diversification

The 3 months correlation between Thrivent and Grocery is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Thrivent High i.e., Thrivent High and Grocery Outlet go up and down completely randomly.

Pair Corralation between Thrivent High and Grocery Outlet

Assuming the 90 days horizon Thrivent High is expected to generate 1.69 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Thrivent High Yield is 11.37 times less risky than Grocery Outlet. It trades about 0.31 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,571  in Grocery Outlet Holding on October 23, 2024 and sell it today you would earn a total of  24.00  from holding Grocery Outlet Holding or generate 1.53% return on investment over 90 days.

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

Thrivent High Yield  vs.  Grocery Outlet Holding

Thrivent High Yield

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 10 (%) 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.

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thrivent High and Grocery Outlet

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

The idea behind Thrivent High Yield and Grocery Outlet Holding 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.