Correlation Between Thrivent High and Motorola Solutions

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

Diversification Opportunities for Thrivent High and Motorola Solutions

0.23

Correlation Coefficient

Thrivent High  Motorola Solutions

Modest diversification

The 3 months correlation between Thrivent and Motorola is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Motorola Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorola Solutions 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 Motorola Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorola Solutions has no effect on the direction of Thrivent High i.e., Thrivent High and Motorola Solutions go up and down completely randomly.

Pair Corralation between Thrivent High and Motorola Solutions

Assuming the 90 days horizon Thrivent High is expected to generate 10.07 times less return on investment than Motorola Solutions. But when comparing it to its historical volatility, Thrivent High Yield is 5.88 times less risky than Motorola Solutions. It trades about 0.1 of its potential returns per unit of risk. Motorola Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  33,450  in Motorola Solutions on September 29, 2024 and sell it today you would earn a total of  39,161  from holding Motorola Solutions or generate 117.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.06%
Values	Daily Returns

Thrivent High Yield  vs.  Motorola Solutions

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.

Motorola Solutions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motorola Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Motorola Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Motorola Solutions

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

The idea behind Thrivent High Yield and Motorola Solutions 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.