Correlation Between Thrivent High and Newtek Business

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

Diversification Opportunities for Thrivent High and Newtek Business

0.61

Correlation Coefficient

Thrivent High  Newtek Business

Poor diversification

The 3 months correlation between Thrivent and Newtek is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services 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 Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of Thrivent High i.e., Thrivent High and Newtek Business go up and down completely randomly.

Pair Corralation between Thrivent High and Newtek Business

Assuming the 90 days horizon Thrivent High is expected to generate 450.0 times less return on investment than Newtek Business. But when comparing it to its historical volatility, Thrivent High Yield is 2.67 times less risky than Newtek Business. It trades about 0.0 of its potential returns per unit of risk. Newtek Business Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,453  in Newtek Business Services on December 4, 2024 and sell it today you would earn a total of  23.00  from holding Newtek Business Services or generate 0.94% 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.  Newtek Business Services

Thrivent High Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 4 (%) 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.

Newtek Business Services

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Newtek Business is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thrivent High and Newtek Business

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

The idea behind Thrivent High Yield and Newtek Business 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.

Check out your portfolio center.

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.