Correlation Between Thrivent Diversified and Thrivent Moderate

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

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

Diversification Opportunities for Thrivent Diversified and Thrivent Moderate

0.84

Correlation Coefficient

Thrivent Diversified  Thrivent Moderate

Very poor diversification

The 3 months correlation between Thrivent and Thrivent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Diversified Income and Thrivent Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Moderate and Thrivent Diversified 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 Diversified Income are associated (or correlated) with Thrivent Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Moderate has no effect on the direction of Thrivent Diversified i.e., Thrivent Diversified and Thrivent Moderate go up and down completely randomly.

Pair Corralation between Thrivent Diversified and Thrivent Moderate

Assuming the 90 days horizon Thrivent Diversified is expected to generate 3.5 times less return on investment than Thrivent Moderate. But when comparing it to its historical volatility, Thrivent Diversified Income is 1.83 times less risky than Thrivent Moderate. It trades about 0.09 of its potential returns per unit of risk. Thrivent Moderate Allocation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Thrivent Moderate Allocation on August 11, 2024 and sell it today you would earn a total of  33.00  from holding Thrivent Moderate Allocation or generate 1.99% return on investment over 90 days.

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

Thrivent Diversified Income  vs.  Thrivent Moderate Allocation

Thrivent Diversified

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Diversified Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Thrivent Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thrivent Moderate

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Moderate Allocation are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Thrivent Moderate may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Thrivent Diversified and Thrivent Moderate

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

The idea behind Thrivent Diversified Income and Thrivent Moderate Allocation 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.