Correlation Between Thrivent High and First Bank
Can any of the company-specific risk be diversified away by investing in both Thrivent High and First Bank 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 High and First Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thrivent High Yield and First Bank, you can compare the effects of market volatilities on Thrivent High and First Bank 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 High with a short position of First Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and First Bank.
Diversification Opportunities for Thrivent High and First Bank
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thrivent and First is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and First Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bank and Thrivent High 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 High Yield are associated (or correlated) with First Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bank has no effect on the direction of Thrivent High i.e., Thrivent High and First Bank go up and down completely randomly.
Pair Corralation between Thrivent High and First Bank
Assuming the 90 days horizon Thrivent High is expected to generate 3.29 times less return on investment than First Bank. But when comparing it to its historical volatility, Thrivent High Yield is 12.65 times less risky than First Bank. It trades about 0.15 of its potential returns per unit of risk. First Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,468 in First Bank on September 12, 2024 and sell it today you would earn a total of 54.00 from holding First Bank or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Thrivent High Yield vs. First Bank
Performance |
| Timeline |
| Thrivent High Yield |
| First Bank |
Thrivent High and First Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and First Bank
The main advantage of trading using opposite Thrivent High and First Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, First Bank 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 First Bank will offset losses from the drop in First Bank's long position.| Thrivent High vs. Thrivent Limited Maturity | Thrivent High vs. Thrivent Income Fund | Thrivent High vs. Thrivent Large Cap | Thrivent High vs. Thrivent Large Cap |
| First Bank vs. First Northwest Bancorp | First Bank vs. FS Bancorp | First Bank vs. The First Bancshares, | First Bank vs. First Guaranty Bancshares |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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