Correlation Between Georgia Tax-free and Thrivent Natural
Can any of the company-specific risk be diversified away by investing in both Georgia Tax-free and Thrivent Natural 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 Georgia Tax-free and Thrivent Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Tax Free Bond and Thrivent Natural Resources, you can compare the effects of market volatilities on Georgia Tax-free and Thrivent Natural 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 Georgia Tax-free with a short position of Thrivent Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Tax-free and Thrivent Natural.
Diversification Opportunities for Georgia Tax-free and Thrivent Natural
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Georgia and Thrivent is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free Bond and Thrivent Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Natural Res and Georgia Tax-free 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 Georgia Tax Free Bond are associated (or correlated) with Thrivent Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Natural Res has no effect on the direction of Georgia Tax-free i.e., Georgia Tax-free and Thrivent Natural go up and down completely randomly.
Pair Corralation between Georgia Tax-free and Thrivent Natural
Assuming the 90 days horizon Georgia Tax Free Bond is expected to under-perform the Thrivent Natural. But the mutual fund apears to be less risky and, when comparing its historical volatility, Georgia Tax Free Bond is 1.26 times less risky than Thrivent Natural. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Thrivent Natural Resources is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 1,006 in Thrivent Natural Resources on October 17, 2024 and sell it today you would lose (10.00) from holding Thrivent Natural Resources or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Tax Free Bond vs. Thrivent Natural Resources
Performance |
| Timeline |
| Georgia Tax Free |
| Thrivent Natural Res |
Georgia Tax-free and Thrivent Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Tax-free and Thrivent Natural
The main advantage of trading using opposite Georgia Tax-free and Thrivent Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Tax-free position performs unexpectedly, Thrivent Natural 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 Natural will offset losses from the drop in Thrivent Natural's long position.| Georgia Tax-free vs. Oklahoma Municipal Fund | Georgia Tax-free vs. Old Westbury Municipal | Georgia Tax-free vs. Ab Impact Municipal | Georgia Tax-free vs. Multisector Bond Sma |
| Thrivent Natural vs. Georgia Tax Free Bond | Thrivent Natural vs. Versatile Bond Portfolio | Thrivent Natural vs. Alliancebernstein Bond | Thrivent Natural vs. Morningstar Defensive Bond |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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