Correlation Between Thrivent High and Intercorp Financial

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

Diversification Opportunities for Thrivent High and Intercorp Financial

0.56

Correlation Coefficient

Thrivent High  Intercorp Financial

Very weak diversification

The 3 months correlation between Thrivent and Intercorp is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Intercorp Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercorp 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 Intercorp Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercorp Financial has no effect on the direction of Thrivent High i.e., Thrivent High and Intercorp Financial go up and down completely randomly.

Pair Corralation between Thrivent High and Intercorp Financial

Assuming the 90 days horizon Thrivent High is expected to generate 11.05 times less return on investment than Intercorp Financial. But when comparing it to its historical volatility, Thrivent High Yield is 8.74 times less risky than Intercorp Financial. It trades about 0.13 of its potential returns per unit of risk. Intercorp Financial Services is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,503  in Intercorp Financial Services on September 5, 2024 and sell it today you would earn a total of  337.00  from holding Intercorp Financial Services or generate 13.46% 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.  Intercorp 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.

Intercorp Financial

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Thrivent High and Intercorp Financial

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

The idea behind Thrivent High Yield and Intercorp 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.