Correlation Between Thrivent Moderate and Thrivent Small

Can any of the company-specific risk be diversified away by investing in both Thrivent Moderate 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 Moderate 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 Moderate Allocation and Thrivent Small Cap, you can compare the effects of market volatilities on Thrivent Moderate 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 Moderate with a short position of Thrivent Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Moderate and Thrivent Small.

Diversification Opportunities for Thrivent Moderate and Thrivent Small

0.82

Correlation Coefficient

Thrivent Moderate  Thrivent Small

Very poor diversification

The 3 months correlation between Thrivent and Thrivent is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Moderate Allocation 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 Moderate 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 Moderate Allocation 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 Moderate i.e., Thrivent Moderate and Thrivent Small go up and down completely randomly.

Pair Corralation between Thrivent Moderate and Thrivent Small

Assuming the 90 days horizon Thrivent Moderate Allocation is expected to generate 0.58 times more return on investment than Thrivent Small. However, Thrivent Moderate Allocation is 1.73 times less risky than Thrivent Small. It trades about -0.06 of its potential returns per unit of risk. Thrivent Small Cap is currently generating about -0.15 per unit of risk. If you would invest  1,564  in Thrivent Moderate Allocation on December 30, 2024 and sell it today you would lose (36.00) from holding Thrivent Moderate Allocation or give up 2.3% of portfolio value over 90 days.

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

Thrivent Moderate Allocation  vs.  Thrivent Small Cap

Thrivent Moderate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Thrivent Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Thrivent Moderate and Thrivent Small

The main advantage of trading using opposite Thrivent Moderate and Thrivent Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Moderate 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 Moderate Allocation 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.