Correlation Between Small Cap and Thrivent Natural
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Thrivent Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Core and Thrivent Natural Resources, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Thrivent Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Thrivent Natural.
Diversification Opportunities for Small Cap and Thrivent Natural
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Small and Thrivent is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core 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 Small Cap 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 Small Cap Core 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 Small Cap i.e., Small Cap and Thrivent Natural go up and down completely randomly.
Pair Corralation between Small Cap and Thrivent Natural
Assuming the 90 days horizon Small Cap Core is expected to under-perform the Thrivent Natural. In addition to that, Small Cap is 29.26 times more volatile than Thrivent Natural Resources. It trades about -0.08 of its total potential returns per unit of risk. Thrivent Natural Resources is currently generating about 0.31 per unit of volatility. If you would invest 983.00 in Thrivent Natural Resources on October 21, 2024 and sell it today you would earn a total of 13.00 from holding Thrivent Natural Resources or generate 1.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Small Cap Core vs. Thrivent Natural Resources
Performance |
Timeline |
Small Cap Core |
Thrivent Natural Res |
Small Cap and Thrivent Natural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Small Cap and Thrivent Natural
The main advantage of trading using opposite Small Cap and Thrivent Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.Small Cap vs. Ab Global E | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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