Correlation Between Thrivent High and Westwood Income
Can any of the company-specific risk be diversified away by investing in both Thrivent High and Westwood Income 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 Westwood Income 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 Westwood Income Opportunity, you can compare the effects of market volatilities on Thrivent High and Westwood Income 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 Westwood Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent High and Westwood Income.
Diversification Opportunities for Thrivent High and Westwood Income
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thrivent and Westwood is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent High Yield and Westwood Income Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Income Oppo 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 Westwood Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Income Oppo has no effect on the direction of Thrivent High i.e., Thrivent High and Westwood Income go up and down completely randomly.
Pair Corralation between Thrivent High and Westwood Income
Assuming the 90 days horizon Thrivent High is expected to generate 8.34 times less return on investment than Westwood Income. But when comparing it to its historical volatility, Thrivent High Yield is 2.7 times less risky than Westwood Income. It trades about 0.16 of its potential returns per unit of risk. Westwood Income Opportunity is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 1,202 in Westwood Income Opportunity on September 3, 2024 and sell it today you would earn a total of 48.00 from holding Westwood Income Opportunity or generate 3.99% 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. Westwood Income Opportunity
Performance |
| Timeline |
| Thrivent High Yield |
| Westwood Income Oppo |
Thrivent High and Westwood Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent High and Westwood Income
The main advantage of trading using opposite Thrivent High and Westwood Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent High position performs unexpectedly, Westwood Income 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 Westwood Income will offset losses from the drop in Westwood Income'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 |
| Westwood Income vs. Vanguard Lifestrategy Moderate | Westwood Income vs. Vanguard Lifestrategy Income | Westwood Income vs. Vanguard Lifestrategy Growth | Westwood Income vs. Vanguard Explorer Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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