Correlation Between Thrivent High and NXG NextGen

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

Diversification Opportunities for Thrivent High and NXG NextGen

0.54

Correlation Coefficient

Thrivent High  NXG NextGen

Very weak diversification

The 3 months correlation between Thrivent and NXG is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and NXG NextGen Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXG NextGen Infrastr 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 NXG NextGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXG NextGen Infrastr has no effect on the direction of Thrivent High i.e., Thrivent High and NXG NextGen go up and down completely randomly.

Pair Corralation between Thrivent High and NXG NextGen

Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.07 times more return on investment than NXG NextGen. However, Thrivent High Yield is 14.09 times less risky than NXG NextGen. It trades about 0.0 of its potential returns per unit of risk. NXG NextGen Infrastructure is currently generating about -0.02 per unit of risk. If you would invest  422.00  in Thrivent High Yield on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Thrivent High Yield or generate 0.0% return on investment over 90 days.

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

Thrivent High Yield  vs.  NXG NextGen Infrastructure

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.

NXG NextGen Infrastr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NXG NextGen Infrastructure are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, NXG NextGen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thrivent High and NXG NextGen

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

The idea behind Thrivent High Yield and NXG NextGen Infrastructure 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.