Correlation Between Thrivent High and Outcrop Gold

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

Diversification Opportunities for Thrivent High and Outcrop Gold

0.64

Correlation Coefficient

Thrivent High  Outcrop Gold

Poor diversification

The 3 months correlation between Thrivent and Outcrop is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold Corp 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of Thrivent High i.e., Thrivent High and Outcrop Gold go up and down completely randomly.

Pair Corralation between Thrivent High and Outcrop Gold

Assuming the 90 days horizon Thrivent High is expected to generate 1.56 times less return on investment than Outcrop Gold. But when comparing it to its historical volatility, Thrivent High Yield is 26.46 times less risky than Outcrop Gold. It trades about 0.1 of its potential returns per unit of risk. Outcrop Gold Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Outcrop Gold Corp on December 1, 2024 and sell it today you would lose (1.00) from holding Outcrop Gold Corp or give up 6.67% of portfolio value over 90 days.

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

Thrivent High Yield  vs.  Outcrop Gold Corp

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.

Outcrop Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outcrop Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Outcrop Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Thrivent High and Outcrop Gold

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

The idea behind Thrivent High Yield and Outcrop Gold Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.