Correlation Between Thrivent Income and Principal Lifetime

Can any of the company-specific risk be diversified away by investing in both Thrivent Income and Principal Lifetime 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 Income and Principal Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thrivent Income Fund and Principal Lifetime Hybrid, you can compare the effects of market volatilities on Thrivent Income and Principal Lifetime 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 Income with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Income and Principal Lifetime.

Diversification Opportunities for Thrivent Income and Principal Lifetime

0.42

Correlation Coefficient

Thrivent Income  Principal Lifetime

Very weak diversification

The 3 months correlation between THRIVENT and PRINCIPAL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Income Fund and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid and Thrivent Income 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 Income Fund are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Thrivent Income i.e., Thrivent Income and Principal Lifetime go up and down completely randomly.

Pair Corralation between Thrivent Income and Principal Lifetime

Assuming the 90 days horizon Thrivent Income is expected to generate 2.28 times less return on investment than Principal Lifetime. In addition to that, Thrivent Income is 1.26 times more volatile than Principal Lifetime Hybrid. It trades about 0.11 of its total potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.31 per unit of volatility. If you would invest  1,054  in Principal Lifetime Hybrid on September 1, 2024 and sell it today you would earn a total of  21.00  from holding Principal Lifetime Hybrid or generate 1.99% return on investment over 90 days.

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

Thrivent Income Fund  vs.  Principal Lifetime Hybrid

Thrivent Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thrivent Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Thrivent Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Principal Lifetime Hybrid

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Lifetime Hybrid are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Principal Lifetime 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 Income and Principal Lifetime

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

The idea behind Thrivent Income Fund and Principal Lifetime Hybrid 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.