Correlation Between Thrivent Small and James Balanced

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

By analyzing existing cross correlation between Thrivent Small Cap and James Balanced Golden, you can compare the effects of market volatilities on Thrivent Small and James Balanced 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 Small with a short position of James Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Small and James Balanced.

Diversification Opportunities for Thrivent Small and James Balanced

0.75

Correlation Coefficient

Thrivent Small  James Balanced

Poor diversification

The 3 months correlation between Thrivent and James is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Small Cap and James Balanced Golden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Balanced Golden and Thrivent Small 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 Small Cap are associated (or correlated) with James Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Balanced Golden has no effect on the direction of Thrivent Small i.e., Thrivent Small and James Balanced go up and down completely randomly.

Pair Corralation between Thrivent Small and James Balanced

Assuming the 90 days horizon Thrivent Small Cap is expected to generate 2.75 times more return on investment than James Balanced. However, Thrivent Small is 2.75 times more volatile than James Balanced Golden. It trades about 0.16 of its potential returns per unit of risk. James Balanced Golden is currently generating about 0.14 per unit of risk. If you would invest  3,201  in Thrivent Small Cap on September 3, 2024 and sell it today you would earn a total of  351.00  from holding Thrivent Small Cap or generate 10.97% return on investment over 90 days.

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

Thrivent Small Cap  vs.  James Balanced Golden

Thrivent Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Thrivent Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

James Balanced Golden

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in James Balanced Golden are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, James Balanced 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 Small and James Balanced

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

The idea behind Thrivent Small Cap and James Balanced Golden 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.