Correlation Between Thrivent High and Capital One

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

Diversification Opportunities for Thrivent High and Capital One

0.61

Correlation Coefficient

Thrivent High  Capital One

Poor diversification

The 3 months correlation between Thrivent and Capital is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Thrivent High i.e., Thrivent High and Capital One go up and down completely randomly.

Pair Corralation between Thrivent High and Capital One

Assuming the 90 days horizon Thrivent High is expected to generate 5.42 times less return on investment than Capital One. But when comparing it to its historical volatility, Thrivent High Yield is 7.83 times less risky than Capital One. It trades about 0.19 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10,628  in Capital One Financial on August 13, 2024 and sell it today you would earn a total of  8,393  from holding Capital One Financial or generate 78.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Thrivent High Yield  vs.  Capital One Financial

Thrivent High Yield

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. 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.

Capital One Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Capital One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Capital One

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

The idea behind Thrivent High Yield and Capital One Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.