Correlation Between Thrivent High and DMY Squared

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

Diversification Opportunities for Thrivent High and DMY Squared

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Thrivent and DMY is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared Technology 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 DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of Thrivent High i.e., Thrivent High and DMY Squared go up and down completely randomly.

Pair Corralation between Thrivent High and DMY Squared

Assuming the 90 days horizon Thrivent High Yield is expected to under-perform the DMY Squared. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent High Yield is 1.92 times less risky than DMY Squared. The mutual fund trades about -0.17 of its potential returns per unit of risk. The dMY Squared Technology is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,059  in dMY Squared Technology on September 23, 2024 and sell it today you would lose (5.00) from holding dMY Squared Technology or give up 0.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Thrivent High Yield  vs.  dMY Squared Technology

 Performance 
       Timeline  
Thrivent High Yield 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
dMY Squared Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days dMY Squared Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Thrivent High and DMY Squared Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thrivent High and DMY Squared

The main advantage of trading using opposite Thrivent High and DMY Squared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, DMY Squared 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 DMY Squared will offset losses from the drop in DMY Squared's long position.
The idea behind Thrivent High Yield and dMY Squared Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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