Correlation Between GM and Thrivent Small
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Thrivent Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Thrivent Small Cap, you can compare the effects of market volatilities on GM 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 GM with a short position of Thrivent Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Thrivent Small.
Diversification Opportunities for GM and Thrivent Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Thrivent is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Thrivent Small go up and down completely randomly.
Pair Corralation between GM and Thrivent Small
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.05 times more return on investment than Thrivent Small. However, GM is 2.05 times more volatile than Thrivent Small Cap. It trades about 0.17 of its potential returns per unit of risk. Thrivent Small Cap is currently generating about 0.31 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Thrivent Small Cap
Performance |
| Timeline |
| General Motors |
| Thrivent Small Cap |
GM and Thrivent Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Thrivent Small
The main advantage of trading using opposite GM and Thrivent Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Thrivent Small Cap 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.| Thrivent Small vs. Thrivent Partner Worldwide | Thrivent Small vs. Thrivent Partner Worldwide | Thrivent Small vs. Thrivent Large Cap | Thrivent Small 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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