Correlation Between Thrivent High and Qudian

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

Diversification Opportunities for Thrivent High and Qudian

0.65

Correlation Coefficient

Thrivent High  Qudian

Poor diversification

The 3 months correlation between Thrivent and Qudian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc 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 Qudian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qudian Inc has no effect on the direction of Thrivent High i.e., Thrivent High and Qudian go up and down completely randomly.

Pair Corralation between Thrivent High and Qudian

Assuming the 90 days horizon Thrivent High is expected to generate 18.54 times less return on investment than Qudian. But when comparing it to its historical volatility, Thrivent High Yield is 21.65 times less risky than Qudian. It trades about 0.21 of its potential returns per unit of risk. Qudian Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Qudian Inc on August 12, 2024 and sell it today you would earn a total of  27.00  from holding Qudian Inc or generate 12.74% return on investment over 90 days.

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

Thrivent High Yield  vs.  Qudian Inc

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.

Qudian Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Qudian

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

The idea behind Thrivent High Yield and Qudian Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.