Correlation Between Energy Basic and Thrivent Government

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

By analyzing existing cross correlation between Energy Basic Materials and Thrivent Government Bond, you can compare the effects of market volatilities on Energy Basic and Thrivent Government 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 Energy Basic with a short position of Thrivent Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Thrivent Government.

Diversification Opportunities for Energy Basic and Thrivent Government

-0.22

Correlation Coefficient

Energy Basic  Thrivent Government

Very good diversification

The 3 months correlation between Energy and Thrivent is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Thrivent Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Government Bond and Energy Basic 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 Energy Basic Materials are associated (or correlated) with Thrivent Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Government Bond has no effect on the direction of Energy Basic i.e., Energy Basic and Thrivent Government go up and down completely randomly.

Pair Corralation between Energy Basic and Thrivent Government

Assuming the 90 days horizon Energy Basic Materials is expected to generate 3.3 times more return on investment than Thrivent Government. However, Energy Basic is 3.3 times more volatile than Thrivent Government Bond. It trades about 0.0 of its potential returns per unit of risk. Thrivent Government Bond is currently generating about -0.13 per unit of risk. If you would invest  992.00  in Energy Basic Materials on September 12, 2024 and sell it today you would lose (2.00) from holding Energy Basic Materials or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Energy Basic Materials  vs.  Thrivent Government Bond

Energy Basic Materials

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Energy Basic Materials has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Energy Basic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thrivent Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thrivent Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Thrivent Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energy Basic and Thrivent Government

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

The idea behind Energy Basic Materials and Thrivent Government Bond 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.