Correlation Between Thrivent High and PPLUS Trust

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

Diversification Opportunities for Thrivent High and PPLUS Trust

0.34

Correlation Coefficient

Thrivent High  PPLUS Trust

Weak diversification

The 3 months correlation between Thrivent and PPLUS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and PPLUS Trust Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPLUS Trust Series 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 PPLUS Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPLUS Trust Series has no effect on the direction of Thrivent High i.e., Thrivent High and PPLUS Trust go up and down completely randomly.

Pair Corralation between Thrivent High and PPLUS Trust

Assuming the 90 days horizon Thrivent High Yield is expected to under-perform the PPLUS Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent High Yield is 3.63 times less risky than PPLUS Trust. The mutual fund trades about -0.29 of its potential returns per unit of risk. The PPLUS Trust Series is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,300  in PPLUS Trust Series on September 26, 2024 and sell it today you would lose (23.00) from holding PPLUS Trust Series or give up 1.0% of portfolio value over 90 days.

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

Thrivent High Yield  vs.  PPLUS Trust Series

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.

PPLUS Trust Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPLUS Trust Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PPLUS Trust is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Thrivent High and PPLUS Trust

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

The idea behind Thrivent High Yield and PPLUS Trust Series 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.