Correlation Between Thrivent High and MBT Bancshares

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

Diversification Opportunities for Thrivent High and MBT Bancshares

-0.39

Correlation Coefficient

Thrivent High  MBT Bancshares

Very good diversification

The 3 months correlation between Thrivent and MBT is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares 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 MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Thrivent High i.e., Thrivent High and MBT Bancshares go up and down completely randomly.

Pair Corralation between Thrivent High and MBT Bancshares

Assuming the 90 days horizon Thrivent High is expected to generate 3.16 times less return on investment than MBT Bancshares. But when comparing it to its historical volatility, Thrivent High Yield is 2.39 times less risky than MBT Bancshares. It trades about 0.09 of its potential returns per unit of risk. MBT Bancshares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,000  in MBT Bancshares on December 28, 2024 and sell it today you would earn a total of  75.00  from holding MBT Bancshares or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Thrivent High Yield  vs.  MBT Bancshares

Thrivent High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 7 (%) 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.

MBT Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MBT Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, MBT Bancshares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thrivent High and MBT Bancshares

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

The idea behind Thrivent High Yield and MBT Bancshares 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.