Correlation Between Thrivent High and Lsv Small

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

Diversification Opportunities for Thrivent High and Lsv Small

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Thrivent and Lsv is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Lsv Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Small Cap 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 Lsv Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Small Cap has no effect on the direction of Thrivent High i.e., Thrivent High and Lsv Small go up and down completely randomly.

Pair Corralation between Thrivent High and Lsv Small

Assuming the 90 days horizon Thrivent High is expected to generate 7.68 times less return on investment than Lsv Small. But when comparing it to its historical volatility, Thrivent High Yield is 7.8 times less risky than Lsv Small. It trades about 0.15 of its potential returns per unit of risk. Lsv Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,860  in Lsv Small Cap on September 6, 2024 and sell it today you would earn a total of  206.00  from holding Lsv Small Cap or generate 11.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Thrivent High Yield  vs.  Lsv Small Cap

 Performance 
       Timeline  
Thrivent High Yield 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
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.
Lsv Small Cap 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lsv Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thrivent High and Lsv Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thrivent High and Lsv Small

The main advantage of trading using opposite Thrivent High and Lsv Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, Lsv Small 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 Lsv Small will offset losses from the drop in Lsv Small's long position.
The idea behind Thrivent High Yield and Lsv Small Cap 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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