Correlation Between Thrivent Small and Thrivent Mid

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

Diversification Opportunities for Thrivent Small and Thrivent Mid

0.95

Correlation Coefficient

Thrivent Small  Thrivent Mid

Almost no diversification

The 3 months correlation between Thrivent and Thrivent is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Small Cap and Thrivent Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Mid Cap 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 Thrivent Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Mid Cap has no effect on the direction of Thrivent Small i.e., Thrivent Small and Thrivent Mid go up and down completely randomly.

Pair Corralation between Thrivent Small and Thrivent Mid

Assuming the 90 days horizon Thrivent Small Cap is expected to under-perform the Thrivent Mid. In addition to that, Thrivent Small is 1.05 times more volatile than Thrivent Mid Cap. It trades about -0.15 of its total potential returns per unit of risk. Thrivent Mid Cap is currently generating about -0.06 per unit of volatility. If you would invest  3,627  in Thrivent Mid Cap on December 30, 2024 and sell it today you would lose (155.00) from holding Thrivent Mid Cap or give up 4.27% of portfolio value over 90 days.

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

Thrivent Small Cap  vs.  Thrivent Mid Cap

Thrivent Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Small Cap 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.

Thrivent Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Thrivent Mid 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 Thrivent Mid

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

The idea behind Thrivent Small Cap and Thrivent Mid Cap 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.