Correlation Between Thrivent High and Hartford Growth

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

Diversification Opportunities for Thrivent High and Hartford Growth

0.6

Correlation Coefficient

Thrivent High  Hartford Growth

Poor diversification

The 3 months correlation between Thrivent and Hartford is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Hartford Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth Oppo 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 Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth Oppo has no effect on the direction of Thrivent High i.e., Thrivent High and Hartford Growth go up and down completely randomly.

Pair Corralation between Thrivent High and Hartford Growth

Assuming the 90 days horizon Thrivent High is expected to generate 32.26 times less return on investment than Hartford Growth. But when comparing it to its historical volatility, Thrivent High Yield is 6.66 times less risky than Hartford Growth. It trades about 0.05 of its potential returns per unit of risk. Hartford Growth Opportunities is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6,456  in Hartford Growth Opportunities on September 16, 2024 and sell it today you would earn a total of  1,058  from holding Hartford Growth Opportunities or generate 16.39% 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.  Hartford Growth Opportunities

Thrivent High Yield

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 3 (%) 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.

Hartford Growth Oppo

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Growth Opportunities are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly inconsistent basic indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent High and Hartford Growth

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

The idea behind Thrivent High Yield and Hartford Growth Opportunities 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.