Correlation Between Thrivent Moderate and Gmo Global

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

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

Diversification Opportunities for Thrivent Moderate and Gmo Global

0.12

Correlation Coefficient

Thrivent Moderate  Gmo Global

Average diversification

The 3 months correlation between Thrivent and Gmo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Moderate Allocation and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Thrivent Moderate 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 Moderate Allocation are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Thrivent Moderate i.e., Thrivent Moderate and Gmo Global go up and down completely randomly.

Pair Corralation between Thrivent Moderate and Gmo Global

Assuming the 90 days horizon Thrivent Moderate Allocation is expected to under-perform the Gmo Global. In addition to that, Thrivent Moderate is 2.71 times more volatile than Gmo Global Equity. It trades about -0.14 of its total potential returns per unit of risk. Gmo Global Equity is currently generating about 0.15 per unit of volatility. If you would invest  2,977  in Gmo Global Equity on September 15, 2024 and sell it today you would earn a total of  41.00  from holding Gmo Global Equity or generate 1.38% return on investment over 90 days.

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

Thrivent Moderate Allocation  vs.  Gmo Global Equity

Thrivent Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gmo Global Equity

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Gmo Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Gmo Global 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 Moderate and Gmo Global

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

The idea behind Thrivent Moderate Allocation and Gmo Global Equity 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .