Correlation Between Deutsche Strategic and Thrivent Natural

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

By analyzing existing cross correlation between Deutsche Strategic High and Thrivent Natural Resources, you can compare the effects of market volatilities on Deutsche Strategic and Thrivent Natural 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 Deutsche Strategic with a short position of Thrivent Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Strategic and Thrivent Natural.

Diversification Opportunities for Deutsche Strategic and Thrivent Natural

0.26

Correlation Coefficient

Deutsche Strategic  Thrivent Natural

Modest diversification

The 3 months correlation between Deutsche and Thrivent is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Strategic High and Thrivent Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Natural Res and Deutsche Strategic 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 Deutsche Strategic High are associated (or correlated) with Thrivent Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Natural Res has no effect on the direction of Deutsche Strategic i.e., Deutsche Strategic and Thrivent Natural go up and down completely randomly.

Pair Corralation between Deutsche Strategic and Thrivent Natural

Assuming the 90 days horizon Deutsche Strategic High is expected to under-perform the Thrivent Natural. But the mutual fund apears to be less risky and, when comparing its historical volatility, Deutsche Strategic High is 1.17 times less risky than Thrivent Natural. The mutual fund trades about -0.36 of its potential returns per unit of risk. The Thrivent Natural Resources is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,005  in Thrivent Natural Resources on October 10, 2024 and sell it today you would lose (11.00) from holding Thrivent Natural Resources or give up 1.09% of portfolio value over 90 days.

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

Deutsche Strategic High  vs.  Thrivent Natural Resources

Deutsche Strategic High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thrivent Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deutsche Strategic and Thrivent Natural

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

The idea behind Deutsche Strategic High and Thrivent Natural Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.