Correlation Between Thrivent Natural and Icon Natural

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

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

Diversification Opportunities for Thrivent Natural and Icon Natural

0.78

Correlation Coefficient

Thrivent Natural  Icon Natural

Poor diversification

The 3 months correlation between Thrivent and Icon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Natural Resources and Icon Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Natural Resources and Thrivent Natural 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 Natural Resources are associated (or correlated) with Icon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Natural Resources has no effect on the direction of Thrivent Natural i.e., Thrivent Natural and Icon Natural go up and down completely randomly.

Pair Corralation between Thrivent Natural and Icon Natural

Assuming the 90 days horizon Thrivent Natural is expected to generate 6.46 times less return on investment than Icon Natural. But when comparing it to its historical volatility, Thrivent Natural Resources is 14.28 times less risky than Icon Natural. It trades about 0.22 of its potential returns per unit of risk. Icon Natural Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,683  in Icon Natural Resources on September 17, 2024 and sell it today you would earn a total of  107.00  from holding Icon Natural Resources or generate 6.36% return on investment over 90 days.

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

Thrivent Natural Resources  vs.  Icon Natural Resources

Thrivent Natural Res

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Natural Resources are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Natural Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Natural Resources are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Natural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thrivent Natural and Icon Natural

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

The idea behind Thrivent Natural Resources and Icon Natural Resources 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.