Correlation Between American Balanced and Thrivent Moderate
Can any of the company-specific risk be diversified away by investing in both American Balanced and Thrivent Moderate 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 Balanced and Thrivent Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and Thrivent Moderate Allocation, you can compare the effects of market volatilities on American Balanced and Thrivent Moderate 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 Balanced with a short position of Thrivent Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Thrivent Moderate.
Diversification Opportunities for American Balanced and Thrivent Moderate
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Thrivent is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Thrivent Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Moderate and American Balanced 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 Balanced Fund are associated (or correlated) with Thrivent Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Moderate has no effect on the direction of American Balanced i.e., American Balanced and Thrivent Moderate go up and down completely randomly.
Pair Corralation between American Balanced and Thrivent Moderate
Assuming the 90 days horizon American Balanced is expected to generate 1.33 times less return on investment than Thrivent Moderate. In addition to that, American Balanced is 1.04 times more volatile than Thrivent Moderate Allocation. It trades about 0.28 of its total potential returns per unit of risk. Thrivent Moderate Allocation is currently generating about 0.38 per unit of volatility. If you would invest 1,643 in Thrivent Moderate Allocation on September 1, 2024 and sell it today you would earn a total of 66.00 from holding Thrivent Moderate Allocation or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Balanced Fund vs. Thrivent Moderate Allocation
Performance |
| Timeline |
| American Balanced |
| Thrivent Moderate |
American Balanced and Thrivent Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Thrivent Moderate
The main advantage of trading using opposite American Balanced and Thrivent Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Thrivent Moderate 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 Moderate will offset losses from the drop in Thrivent Moderate's long position.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| Thrivent Moderate vs. Thrivent Partner Worldwide | Thrivent Moderate vs. Thrivent Partner Worldwide | Thrivent Moderate vs. Thrivent Large Cap | Thrivent Moderate vs. Thrivent Limited Maturity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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