Correlation Between Thrivent High and Church Dwight

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

By analyzing existing cross correlation between Thrivent High Yield and Church Dwight, you can compare the effects of market volatilities on Thrivent High and Church Dwight 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 High with a short position of Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Church Dwight.

Diversification Opportunities for Thrivent High and Church Dwight

0.55

Correlation Coefficient

Thrivent High  Church Dwight

Very weak diversification

The 3 months correlation between Thrivent and Church is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight and Thrivent High 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 High Yield are associated (or correlated) with Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Thrivent High i.e., Thrivent High and Church Dwight go up and down completely randomly.

Pair Corralation between Thrivent High and Church Dwight

Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.24 times more return on investment than Church Dwight. However, Thrivent High Yield is 4.12 times less risky than Church Dwight. It trades about -0.01 of its potential returns per unit of risk. Church Dwight is currently generating about -0.08 per unit of risk. If you would invest  418.00  in Thrivent High Yield on January 28, 2025 and sell it today you would lose (1.00) from holding Thrivent High Yield or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Thrivent High Yield  vs.  Church Dwight

Thrivent High Yield

Risk-Adjusted Performance

Very Weak

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

Church Dwight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Church Dwight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Thrivent High and Church Dwight

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

The idea behind Thrivent High Yield and Church Dwight 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..