Correlation Between American Funds and Thrivent High
Can any of the company-specific risk be diversified away by investing in both American Funds and Thrivent High 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 American Funds and Thrivent High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2050 and Thrivent High Yield, you can compare the effects of market volatilities on American Funds and Thrivent High 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 American Funds with a short position of Thrivent High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Thrivent High.
Diversification Opportunities for American Funds and Thrivent High
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Thrivent is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2050 and Thrivent High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent High Yield and American Funds 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 American Funds 2050 are associated (or correlated) with Thrivent High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent High Yield has no effect on the direction of American Funds i.e., American Funds and Thrivent High go up and down completely randomly.
Pair Corralation between American Funds and Thrivent High
Assuming the 90 days horizon American Funds 2050 is expected to generate 2.71 times more return on investment than Thrivent High. However, American Funds is 2.71 times more volatile than Thrivent High Yield. It trades about 0.07 of its potential returns per unit of risk. Thrivent High Yield is currently generating about 0.07 per unit of risk. If you would invest 1,955 in American Funds 2050 on March 8, 2024 and sell it today you would earn a total of 48.00 from holding American Funds 2050 or generate 2.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
American Funds 2050 vs. Thrivent High Yield
Performance |
Timeline |
American Funds 2050 |
Thrivent High Yield |
American Funds and Thrivent High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and Thrivent High
The main advantage of trading using opposite American Funds and Thrivent High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Thrivent High 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 High will offset losses from the drop in Thrivent High's long position.American Funds vs. Fidelity Freedom 2045 | American Funds vs. Fidelity Freedom 2005 | American Funds vs. Fidelity Freedom Income | American Funds vs. Fidelity Freedom 2015 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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