Correlation Between Thrivent Large and Thrivent Small

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

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

Diversification Opportunities for Thrivent Large and Thrivent Small

0.85

Correlation Coefficient

Thrivent Large  Thrivent Small

Very poor diversification

The 3 months correlation between Thrivent and Thrivent is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Large Cap and Thrivent Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Small Cap and Thrivent Large 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 Large Cap are associated (or correlated) with Thrivent Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Small Cap has no effect on the direction of Thrivent Large i.e., Thrivent Large and Thrivent Small go up and down completely randomly.

Pair Corralation between Thrivent Large and Thrivent Small

Assuming the 90 days horizon Thrivent Large Cap is expected to generate 1.39 times more return on investment than Thrivent Small. However, Thrivent Large is 1.39 times more volatile than Thrivent Small Cap. It trades about -0.08 of its potential returns per unit of risk. Thrivent Small Cap is currently generating about -0.22 per unit of risk. If you would invest  2,310  in Thrivent Large Cap on November 29, 2024 and sell it today you would lose (151.00) from holding Thrivent Large Cap or give up 6.54% of portfolio value over 90 days.

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

Thrivent Large Cap  vs.  Thrivent Small Cap

Thrivent Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Thrivent Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Thrivent Large and Thrivent Small

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

The idea behind Thrivent Large Cap and Thrivent Small Cap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.