Correlation Between Aig Government and Thrivent Large

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Can any of the company-specific risk be diversified away by investing in both Aig Government and Thrivent Large 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 Aig Government and Thrivent Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Thrivent Large Cap, you can compare the effects of market volatilities on Aig Government and Thrivent Large 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 Aig Government with a short position of Thrivent Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Thrivent Large.

Diversification Opportunities for Aig Government and Thrivent Large

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Aig and Thrivent is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Thrivent Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Large Cap and Aig Government 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 Aig Government Money are associated (or correlated) with Thrivent Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Large Cap has no effect on the direction of Aig Government i.e., Aig Government and Thrivent Large go up and down completely randomly.

Pair Corralation between Aig Government and Thrivent Large

Assuming the 90 days horizon Aig Government is expected to generate 11.71 times less return on investment than Thrivent Large. But when comparing it to its historical volatility, Aig Government Money is 4.1 times less risky than Thrivent Large. It trades about 0.04 of its potential returns per unit of risk. Thrivent Large Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,545  in Thrivent Large Cap on September 12, 2024 and sell it today you would earn a total of  518.00  from holding Thrivent Large Cap or generate 20.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

Aig Government Money  vs.  Thrivent Large Cap

 Performance 
       Timeline  
Aig Government Money 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aig Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aig Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Thrivent Large Cap 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Large Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Thrivent Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aig Government and Thrivent Large Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aig Government and Thrivent Large

The main advantage of trading using opposite Aig Government and Thrivent Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Thrivent Large 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 Thrivent Large will offset losses from the drop in Thrivent Large's long position.
The idea behind Aig Government Money and Thrivent Large Cap 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.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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