Correlation Between Thrivent Moderately and Semiconductor Ultrasector

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

By analyzing existing cross correlation between Thrivent Moderately Aggressive and Semiconductor Ultrasector Profund, you can compare the effects of market volatilities on Thrivent Moderately and Semiconductor Ultrasector 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 Moderately with a short position of Semiconductor Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Moderately and Semiconductor Ultrasector.

Diversification Opportunities for Thrivent Moderately and Semiconductor Ultrasector

0.8

Correlation Coefficient

Thrivent Moderately  Semiconductor Ultrasector

Very poor diversification

The 3 months correlation between Thrivent and Semiconductor is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Moderately Aggressive and Semiconductor Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Ultrasector and Thrivent Moderately 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 Moderately Aggressive are associated (or correlated) with Semiconductor Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Ultrasector has no effect on the direction of Thrivent Moderately i.e., Thrivent Moderately and Semiconductor Ultrasector go up and down completely randomly.

Pair Corralation between Thrivent Moderately and Semiconductor Ultrasector

Assuming the 90 days horizon Thrivent Moderately is expected to generate 3.24 times less return on investment than Semiconductor Ultrasector. But when comparing it to its historical volatility, Thrivent Moderately Aggressive is 5.79 times less risky than Semiconductor Ultrasector. It trades about 0.18 of its potential returns per unit of risk. Semiconductor Ultrasector Profund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,682  in Semiconductor Ultrasector Profund on September 2, 2024 and sell it today you would earn a total of  676.00  from holding Semiconductor Ultrasector Profund or generate 18.36% return on investment over 90 days.

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

Thrivent Moderately Aggressive  vs.  Semiconductor Ultrasector Prof

Thrivent Moderately

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Moderately Aggressive are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Thrivent Moderately is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Semiconductor Ultrasector

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Ultrasector Profund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Semiconductor Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent Moderately and Semiconductor Ultrasector

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

The idea behind Thrivent Moderately Aggressive and Semiconductor Ultrasector Profund 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.