Correlation Between Thrivent Natural and Aqr International

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

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

Diversification Opportunities for Thrivent Natural and Aqr International

-0.09

Correlation Coefficient

Thrivent Natural  Aqr International

Good diversification

The 3 months correlation between Thrivent and Aqr is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Natural Resources and Aqr International Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr International and Thrivent Natural 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 Natural Resources are associated (or correlated) with Aqr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr International has no effect on the direction of Thrivent Natural i.e., Thrivent Natural and Aqr International go up and down completely randomly.

Pair Corralation between Thrivent Natural and Aqr International

Assuming the 90 days horizon Thrivent Natural is expected to generate 1.04 times less return on investment than Aqr International. But when comparing it to its historical volatility, Thrivent Natural Resources is 5.98 times less risky than Aqr International. It trades about 0.21 of its potential returns per unit of risk. Aqr International Defensive is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,262  in Aqr International Defensive on October 10, 2024 and sell it today you would earn a total of  140.00  from holding Aqr International Defensive or generate 11.09% return on investment over 90 days.

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

Thrivent Natural Resources  vs.  Aqr International Defensive

Thrivent Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aqr International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr International Defensive has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aqr International 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 Natural and Aqr International

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

The idea behind Thrivent Natural Resources and Aqr International Defensive 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.