Correlation Between Thrivent High and Schwab REIT
Can any of the company-specific risk be diversified away by investing in both Thrivent High and Schwab REIT 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 Schwab REIT 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 Schwab REIT ETF, you can compare the effects of market volatilities on Thrivent High and Schwab REIT 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 Schwab REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Schwab REIT.
Diversification Opportunities for Thrivent High and Schwab REIT
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thrivent and Schwab is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Schwab REIT ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab REIT ETF 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 Schwab REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab REIT ETF has no effect on the direction of Thrivent High i.e., Thrivent High and Schwab REIT go up and down completely randomly.
Pair Corralation between Thrivent High and Schwab REIT
Assuming the 90 days horizon Thrivent High is expected to generate 1.35 times less return on investment than Schwab REIT. But when comparing it to its historical volatility, Thrivent High Yield is 3.69 times less risky than Schwab REIT. It trades about 0.11 of its potential returns per unit of risk. Schwab REIT ETF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,919 in Schwab REIT ETF on September 3, 2024 and sell it today you would earn a total of 394.00 from holding Schwab REIT ETF or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thrivent High Yield vs. Schwab REIT ETF
Performance |
| Timeline |
| Thrivent High Yield |
| Schwab REIT ETF |
Thrivent High and Schwab REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and Schwab REIT
The main advantage of trading using opposite Thrivent High and Schwab REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, Schwab REIT 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 Schwab REIT will offset losses from the drop in Schwab REIT'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 |
| Schwab REIT vs. Schwab International Equity | Schwab REIT vs. Schwab Emerging Markets | Schwab REIT vs. Schwab Small Cap ETF | Schwab REIT vs. Schwab Large Cap ETF |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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