Correlation Between Thrivent High and Rand Capital

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

Diversification Opportunities for Thrivent High and Rand Capital

0.12

Correlation Coefficient

Thrivent High  Rand Capital

Average diversification

The 3 months correlation between Thrivent and Rand is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital 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 Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Thrivent High i.e., Thrivent High and Rand Capital go up and down completely randomly.

Pair Corralation between Thrivent High and Rand Capital

Assuming the 90 days horizon Thrivent High Yield is expected to under-perform the Rand Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent High Yield is 17.25 times less risky than Rand Capital. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Rand Capital Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,367  in Rand Capital Corp on September 23, 2024 and sell it today you would earn a total of  339.00  from holding Rand Capital Corp or generate 24.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Thrivent High Yield  vs.  Rand Capital Corp

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.

Rand Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Rand Capital

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

The idea behind Thrivent High Yield and Rand Capital 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.