Correlation Between Thrivent Large and Ultra-short Fixed

Can any of the company-specific risk be diversified away by investing in both Thrivent Large and Ultra-short Fixed 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 Ultra-short Fixed 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 Ultra Short Fixed Income, you can compare the effects of market volatilities on Thrivent Large and Ultra-short Fixed 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 Ultra-short Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Large and Ultra-short Fixed.

Diversification Opportunities for Thrivent Large and Ultra-short Fixed

0.77

Correlation Coefficient

Thrivent Large  Ultra-short Fixed

Poor diversification

The 3 months correlation between Thrivent and Ultra-short is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Large Cap and Ultra Short Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Short Fixed 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 Ultra-short Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Short Fixed has no effect on the direction of Thrivent Large i.e., Thrivent Large and Ultra-short Fixed go up and down completely randomly.

Pair Corralation between Thrivent Large and Ultra-short Fixed

Assuming the 90 days horizon Thrivent Large Cap is expected to generate 8.13 times more return on investment than Ultra-short Fixed. However, Thrivent Large is 8.13 times more volatile than Ultra Short Fixed Income. It trades about 0.2 of its potential returns per unit of risk. Ultra Short Fixed Income is currently generating about 0.13 per unit of risk. If you would invest  3,092  in Thrivent Large Cap on September 1, 2024 and sell it today you would earn a total of  263.00  from holding Thrivent Large Cap or generate 8.51% return on investment over 90 days.

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

Thrivent Large Cap  vs.  Ultra Short Fixed Income

Thrivent Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Thrivent Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ultra Short Fixed

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Short Fixed Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Ultra-short Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thrivent Large and Ultra-short Fixed

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

The idea behind Thrivent Large Cap and Ultra Short Fixed Income 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.