Correlation Between Thrivent Small and Thrivent Government

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

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

Diversification Opportunities for Thrivent Small and Thrivent Government

-0.68

Correlation Coefficient

Thrivent Small  Thrivent Government

Excellent diversification

The 3 months correlation between Thrivent and Thrivent is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Small Cap 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 Thrivent Small 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 Small Cap 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 Thrivent Small i.e., Thrivent Small and Thrivent Government go up and down completely randomly.

Pair Corralation between Thrivent Small and Thrivent Government

Assuming the 90 days horizon Thrivent Small Cap is expected to generate 3.64 times more return on investment than Thrivent Government. However, Thrivent Small is 3.64 times more volatile than Thrivent Government Bond. It trades about 0.16 of its potential returns per unit of risk. Thrivent Government Bond is currently generating about -0.07 per unit of risk. If you would invest  3,201  in Thrivent Small Cap on September 2, 2024 and sell it today you would earn a total of  351.00  from holding Thrivent Small Cap or generate 10.97% return on investment over 90 days.

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

Thrivent Small Cap  vs.  Thrivent Government Bond

Thrivent Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Thrivent Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Thrivent Small and Thrivent Government

The main advantage of trading using opposite Thrivent Small and Thrivent Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Small 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 Thrivent Small Cap 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.