Correlation Between Wasatch Long/short and Thrivent Income

Can any of the company-specific risk be diversified away by investing in both Wasatch Long/short and Thrivent Income 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 Wasatch Long/short and Thrivent Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wasatch Longshort Alpha and Thrivent Income Fund, you can compare the effects of market volatilities on Wasatch Long/short and Thrivent Income 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 Wasatch Long/short with a short position of Thrivent Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Long/short and Thrivent Income.

Diversification Opportunities for Wasatch Long/short and Thrivent Income

-0.54

Correlation Coefficient

Wasatch Long/short  Thrivent Income

Excellent diversification

The 3 months correlation between Wasatch and Thrivent is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Longshort Alpha and Thrivent Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Income and Wasatch Long/short 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 Wasatch Longshort Alpha are associated (or correlated) with Thrivent Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Income has no effect on the direction of Wasatch Long/short i.e., Wasatch Long/short and Thrivent Income go up and down completely randomly.

Pair Corralation between Wasatch Long/short and Thrivent Income

Assuming the 90 days horizon Wasatch Longshort Alpha is expected to under-perform the Thrivent Income. In addition to that, Wasatch Long/short is 2.41 times more volatile than Thrivent Income Fund. It trades about -0.11 of its total potential returns per unit of risk. Thrivent Income Fund is currently generating about 0.1 per unit of volatility. If you would invest  799.00  in Thrivent Income Fund on December 30, 2024 and sell it today you would earn a total of  16.00  from holding Thrivent Income Fund or generate 2.0% return on investment over 90 days.

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

Wasatch Longshort Alpha  vs.  Thrivent Income Fund

Wasatch Longshort Alpha

Risk-Adjusted Performance

Very Weak

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

Thrivent Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Income Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wasatch Long/short and Thrivent Income

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

The idea behind Wasatch Longshort Alpha and Thrivent Income Fund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.