Correlation Between Thrivent Income and Wasatch Long/short

Can any of the company-specific risk be diversified away by investing in both Thrivent Income and Wasatch Long/short 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 Wasatch Long/short 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 Wasatch Longshort Alpha, you can compare the effects of market volatilities on Thrivent Income and Wasatch Long/short 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 Wasatch Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Income and Wasatch Long/short.

Diversification Opportunities for Thrivent Income and Wasatch Long/short

-0.54

Correlation Coefficient

Thrivent Income  Wasatch Long/short

Excellent diversification

The 3 months correlation between Thrivent and Wasatch is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Income Fund and Wasatch Longshort Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Longshort Alpha 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 Wasatch Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Longshort Alpha has no effect on the direction of Thrivent Income i.e., Thrivent Income and Wasatch Long/short go up and down completely randomly.

Pair Corralation between Thrivent Income and Wasatch Long/short

Assuming the 90 days horizon Thrivent Income Fund is expected to generate 0.42 times more return on investment than Wasatch Long/short. However, Thrivent Income Fund is 2.41 times less risky than Wasatch Long/short. It trades about 0.1 of its potential returns per unit of risk. Wasatch Longshort Alpha is currently generating about -0.11 per unit of risk. If you would invest  799.00  in Thrivent Income Fund on December 30, 2024 and sell it today you would earn a total of  16.00  from holding Thrivent Income Fund or generate 2.0% return on investment over 90 days.

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

Thrivent Income Fund  vs.  Wasatch Longshort Alpha

Thrivent Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Income Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. 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.

Wasatch Longshort Alpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wasatch Longshort Alpha has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wasatch Long/short 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 Wasatch Long/short

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

The idea behind Thrivent Income Fund and Wasatch Longshort Alpha 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.