Correlation Between Thrivent Natural and Pimco Energy

Can any of the company-specific risk be diversified away by investing in both Thrivent Natural and Pimco Energy 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 Pimco Energy 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 Pimco Energy Tactical, you can compare the effects of market volatilities on Thrivent Natural and Pimco Energy 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 Pimco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Natural and Pimco Energy.

Diversification Opportunities for Thrivent Natural and Pimco Energy

0.38

Correlation Coefficient

Thrivent Natural  Pimco Energy

Weak diversification

The 3 months correlation between Thrivent and Pimco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Natural Resources and Pimco Energy Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Energy Tactical 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 Pimco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Energy Tactical has no effect on the direction of Thrivent Natural i.e., Thrivent Natural and Pimco Energy go up and down completely randomly.

Pair Corralation between Thrivent Natural and Pimco Energy

Assuming the 90 days horizon Thrivent Natural Resources is expected to under-perform the Pimco Energy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent Natural Resources is 5.63 times less risky than Pimco Energy. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Pimco Energy Tactical is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,322  in Pimco Energy Tactical on October 8, 2024 and sell it today you would earn a total of  307.00  from holding Pimco Energy Tactical or generate 13.22% return on investment over 90 days.

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

Thrivent Natural Resources  vs.  Pimco Energy Tactical

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.

Pimco Energy Tactical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Energy Tactical are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pimco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent Natural and Pimco Energy

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

The idea behind Thrivent Natural Resources and Pimco Energy Tactical 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.