Correlation Between T Rowe and Thrivent Income

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

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

Diversification Opportunities for T Rowe and Thrivent Income

0.72

Correlation Coefficient

T Rowe  Thrivent Income

Poor diversification

The 3 months correlation between PATFX and Thrivent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Thrivent Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Income and T Rowe 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 T Rowe Price are associated (or correlated) with Thrivent Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Income has no effect on the direction of T Rowe i.e., T Rowe and Thrivent Income go up and down completely randomly.

Pair Corralation between T Rowe and Thrivent Income

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Thrivent Income. But the mutual fund apears to be less risky and, when comparing its historical volatility, T Rowe Price is 1.21 times less risky than Thrivent Income. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Thrivent Income Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  799.00  in Thrivent Income Fund on December 29, 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

T Rowe Price  vs.  Thrivent Income Fund

T Rowe Price

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with T Rowe and Thrivent Income

The main advantage of trading using opposite T Rowe and Thrivent Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Thrivent Income 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 Income will offset losses from the drop in Thrivent Income's long position.

The idea behind T Rowe Price and Thrivent Income Fund 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.