Correlation Between Vanguard 500 and Thrivent Natural
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 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 Vanguard 500 and Thrivent Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Thrivent Natural Resources, you can compare the effects of market volatilities on Vanguard 500 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 Vanguard 500 with a short position of Thrivent Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Thrivent Natural.
Diversification Opportunities for Vanguard 500 and Thrivent Natural
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Thrivent is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index 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 Vanguard 500 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 Vanguard 500 Index 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 Vanguard 500 i.e., Vanguard 500 and Thrivent Natural go up and down completely randomly.
Pair Corralation between Vanguard 500 and Thrivent Natural
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 9.78 times more return on investment than Thrivent Natural. However, Vanguard 500 is 9.78 times more volatile than Thrivent Natural Resources. It trades about 0.13 of its potential returns per unit of risk. Thrivent Natural Resources is currently generating about 0.3 per unit of risk. If you would invest 21,177 in Vanguard 500 Index on September 12, 2024 and sell it today you would earn a total of 8,422 from holding Vanguard 500 Index or generate 39.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Thrivent Natural Resources
Performance |
| Timeline |
| Vanguard 500 Index |
| Thrivent Natural Res |
Vanguard 500 and Thrivent Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Thrivent Natural
The main advantage of trading using opposite Vanguard 500 and Thrivent Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 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.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard 500 Index | Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Total Stock |
| Thrivent Natural vs. Vanguard Total Stock | Thrivent Natural vs. Vanguard 500 Index | Thrivent Natural vs. Vanguard Total Stock | Thrivent Natural vs. Vanguard Total Stock |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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