Correlation Between Thrivent High and Sequoia Fund

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

Diversification Opportunities for Thrivent High and Sequoia Fund

0.68

Correlation Coefficient

Thrivent High  Sequoia Fund

Poor diversification

The 3 months correlation between Thrivent and Sequoia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Sequoia Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Fund 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 Sequoia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Fund has no effect on the direction of Thrivent High i.e., Thrivent High and Sequoia Fund go up and down completely randomly.

Pair Corralation between Thrivent High and Sequoia Fund

Assuming the 90 days horizon Thrivent High is expected to generate 2.86 times less return on investment than Sequoia Fund. But when comparing it to its historical volatility, Thrivent High Yield is 4.23 times less risky than Sequoia Fund. It trades about 0.16 of its potential returns per unit of risk. Sequoia Fund Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  18,540  in Sequoia Fund Inc on December 21, 2024 and sell it today you would earn a total of  1,009  from holding Sequoia Fund Inc or generate 5.44% return on investment over 90 days.

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

Thrivent High Yield  vs.  Sequoia Fund Inc

Thrivent High Yield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 12 (%) 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.

Sequoia Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sequoia Fund Inc are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sequoia Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thrivent High and Sequoia Fund

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

The idea behind Thrivent High Yield and Sequoia Fund Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.