Correlation Between Thrivent High and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Thrivent High and IShares MSCI 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 IShares MSCI 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 iShares MSCI USA, you can compare the effects of market volatilities on Thrivent High and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and IShares MSCI.
Diversification Opportunities for Thrivent High and IShares MSCI
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thrivent and IShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Thrivent High i.e., Thrivent High and IShares MSCI go up and down completely randomly.
Pair Corralation between Thrivent High and IShares MSCI
Assuming the 90 days horizon Thrivent High is expected to generate 3.54 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Thrivent High Yield is 5.36 times less risky than IShares MSCI. It trades about 0.21 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 18,009 in iShares MSCI USA on August 29, 2024 and sell it today you would earn a total of 446.00 from holding iShares MSCI USA or generate 2.48% 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. iShares MSCI USA
Performance |
| Timeline |
| Thrivent High Yield |
| iShares MSCI USA |
Thrivent High and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and IShares MSCI
The main advantage of trading using opposite Thrivent High and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI'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 |
| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. Invesco SP 500 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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