Correlation Between Thrivent Income and American Funds
Can any of the company-specific risk be diversified away by investing in both Thrivent Income and American Funds 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 Income and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thrivent Income Fund and American Funds 2010, you can compare the effects of market volatilities on Thrivent Income and American Funds 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 Income with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Income and American Funds.
Diversification Opportunities for Thrivent Income and American Funds
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THRIVENT and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Income Fund and American Funds 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2010 and Thrivent Income 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 Income Fund are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2010 has no effect on the direction of Thrivent Income i.e., Thrivent Income and American Funds go up and down completely randomly.
Pair Corralation between Thrivent Income and American Funds
Assuming the 90 days horizon Thrivent Income is expected to generate 1.45 times less return on investment than American Funds. In addition to that, Thrivent Income is 1.14 times more volatile than American Funds 2010. It trades about 0.07 of its total potential returns per unit of risk. American Funds 2010 is currently generating about 0.11 per unit of volatility. If you would invest 1,073 in American Funds 2010 on August 31, 2024 and sell it today you would earn a total of 168.00 from holding American Funds 2010 or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Thrivent Income Fund vs. American Funds 2010
Performance |
| Timeline |
| Thrivent Income |
| American Funds 2010 |
Thrivent Income and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thrivent Income and American Funds
The main advantage of trading using opposite Thrivent Income and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Income position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.The idea behind Thrivent Income Fund and American Funds 2010 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Thrivent Income Fund | American Funds vs. Inflation Protected Bond Fund | American Funds vs. Rationalpier 88 Convertible |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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