Correlation Between Thrivent High and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Thrivent High and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal SA ADR, you can compare the effects of market volatilities on Thrivent High and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and ArcelorMittal.
Diversification Opportunities for Thrivent High and ArcelorMittal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thrivent and ArcelorMittal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Thrivent High i.e., Thrivent High and ArcelorMittal go up and down completely randomly.
Pair Corralation between Thrivent High and ArcelorMittal
Assuming the 90 days horizon Thrivent High is expected to generate 12.3 times less return on investment than ArcelorMittal. But when comparing it to its historical volatility, Thrivent High Yield is 15.58 times less risky than ArcelorMittal. It trades about 0.24 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,328 in ArcelorMittal SA ADR on August 24, 2024 and sell it today you would earn a total of 201.00 from holding ArcelorMittal SA ADR or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thrivent High Yield vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| Thrivent High Yield |
| ArcelorMittal SA ADR |
Thrivent High and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and ArcelorMittal
The main advantage of trading using opposite Thrivent High and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Thrivent High vs. Thrivent Large Cap | Thrivent High vs. HUMANA INC | Thrivent High vs. Aquagold International | Thrivent High vs. Barloworld Ltd ADR |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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