Correlation Between Applied Finance and Thrivent Small
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Thrivent Small 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 Applied Finance and Thrivent Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Thrivent Small Cap, you can compare the effects of market volatilities on Applied Finance and Thrivent Small 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 Applied Finance with a short position of Thrivent Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Thrivent Small.
Diversification Opportunities for Applied Finance and Thrivent Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Applied and Thrivent is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Thrivent Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Small Cap and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Thrivent Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Small Cap has no effect on the direction of Applied Finance i.e., Applied Finance and Thrivent Small go up and down completely randomly.
Pair Corralation between Applied Finance and Thrivent Small
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.51 times more return on investment than Thrivent Small. However, Applied Finance is 1.51 times more volatile than Thrivent Small Cap. It trades about 0.07 of its potential returns per unit of risk. Thrivent Small Cap is currently generating about 0.09 per unit of risk. If you would invest 1,887 in Applied Finance Explorer on September 3, 2024 and sell it today you would earn a total of 541.00 from holding Applied Finance Explorer or generate 28.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Thrivent Small Cap
Performance |
| Timeline |
| Applied Finance Explorer |
| Thrivent Small Cap |
Applied Finance and Thrivent Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Thrivent Small
The main advantage of trading using opposite Applied Finance and Thrivent Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Thrivent Small 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 Small will offset losses from the drop in Thrivent Small's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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