Correlation Between Thrivent High and Virginia National

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

Diversification Opportunities for Thrivent High and Virginia National

0.6

Correlation Coefficient

Thrivent High  Virginia National

Poor diversification

The 3 months correlation between Thrivent and Virginia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Thrivent High i.e., Thrivent High and Virginia National go up and down completely randomly.

Pair Corralation between Thrivent High and Virginia National

Assuming the 90 days horizon Thrivent High is expected to generate 8.28 times less return on investment than Virginia National. But when comparing it to its historical volatility, Thrivent High Yield is 12.03 times less risky than Virginia National. It trades about 0.13 of its potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,902  in Virginia National Bankshares on September 5, 2024 and sell it today you would earn a total of  368.00  from holding Virginia National Bankshares or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Thrivent High Yield  vs.  Virginia National Bankshares

Thrivent High Yield

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 9 (%) 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.

Virginia National

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virginia National Bankshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Virginia National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thrivent High and Virginia National

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

The idea behind Thrivent High Yield and Virginia National Bankshares 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.