Correlation Between Thrivent High and Royalty Management

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

Diversification Opportunities for Thrivent High and Royalty Management

-0.22

Correlation Coefficient

Thrivent High  Royalty Management

Very good diversification

The 3 months correlation between Thrivent and Royalty is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Thrivent High i.e., Thrivent High and Royalty Management go up and down completely randomly.

Pair Corralation between Thrivent High and Royalty Management

Assuming the 90 days horizon Thrivent High Yield is expected to under-perform the Royalty Management. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent High Yield is 134.17 times less risky than Royalty Management. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Royalty Management Holding is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1.29  in Royalty Management Holding on September 26, 2024 and sell it today you would earn a total of  1.21  from holding Royalty Management Holding or generate 93.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

Thrivent High Yield  vs.  Royalty Management Holding

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.

Royalty Management

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Royalty Management showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Royalty Management

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

The idea behind Thrivent High Yield and Royalty Management Holding 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.