Correlation Between Thrivent High and First Interstate

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

Diversification Opportunities for Thrivent High and First Interstate

0.58

Correlation Coefficient

Thrivent High  First Interstate

Very weak diversification

The 3 months correlation between Thrivent and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban 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 First Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of Thrivent High i.e., Thrivent High and First Interstate go up and down completely randomly.

Pair Corralation between Thrivent High and First Interstate

Assuming the 90 days horizon Thrivent High Yield is expected to generate 0.13 times more return on investment than First Interstate. However, Thrivent High Yield is 7.62 times less risky than First Interstate. It trades about 0.08 of its potential returns per unit of risk. First Interstate BancSystem is currently generating about 0.01 per unit of risk. If you would invest  426.00  in Thrivent High Yield on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Thrivent High Yield or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Thrivent High Yield  vs.  First Interstate BancSystem

Thrivent High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 11 (%) 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.

First Interstate Ban

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Interstate BancSystem are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, First Interstate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and First Interstate

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

The idea behind Thrivent High Yield and First Interstate BancSystem 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.