Correlation Between Thrivent High and FT Cboe

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

Diversification Opportunities for Thrivent High and FT Cboe

0.71

Correlation Coefficient

Thrivent High  FT Cboe

Poor diversification

The 3 months correlation between Thrivent and KNG is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Thrivent High i.e., Thrivent High and FT Cboe go up and down completely randomly.

Pair Corralation between Thrivent High and FT Cboe

Assuming the 90 days horizon Thrivent High is expected to generate 2.2 times less return on investment than FT Cboe. But when comparing it to its historical volatility, Thrivent High Yield is 3.34 times less risky than FT Cboe. It trades about 0.15 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,271  in FT Cboe Vest on September 2, 2024 and sell it today you would earn a total of  164.00  from holding FT Cboe Vest or generate 3.11% return on investment over 90 days.

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

Thrivent High Yield  vs.  FT Cboe Vest

Thrivent High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 11 (%) 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.

FT Cboe Vest

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FT Cboe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Thrivent High and FT Cboe

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

The idea behind Thrivent High Yield and FT Cboe Vest 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.