Correlation Between Thrivent Natural and Third Avenue

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

Diversification Opportunities for Thrivent Natural and Third Avenue

-0.62

Correlation Coefficient

Thrivent Natural  Third Avenue

Excellent diversification

The 3 months correlation between Thrivent and Third is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Natural Resources and Third Avenue Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Value 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Value has no effect on the direction of Thrivent Natural i.e., Thrivent Natural and Third Avenue go up and down completely randomly.

Pair Corralation between Thrivent Natural and Third Avenue

Assuming the 90 days horizon Thrivent Natural Resources is expected to generate 0.1 times more return on investment than Third Avenue. However, Thrivent Natural Resources is 10.24 times less risky than Third Avenue. It trades about 0.22 of its potential returns per unit of risk. Third Avenue Value is currently generating about 0.02 per unit of risk. If you would invest  899.00  in Thrivent Natural Resources on September 16, 2024 and sell it today you would earn a total of  106.00  from holding Thrivent Natural Resources or generate 11.79% return on investment over 90 days.

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

Thrivent Natural Resources  vs.  Third Avenue Value

Thrivent Natural Res

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Natural Resources are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. 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.

Third Avenue Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Third Avenue Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Natural and Third Avenue

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

The idea behind Thrivent Natural Resources and Third Avenue Value 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.