Correlation Between Vanguard Small-cap and Thrivent High
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Thrivent High 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 Small-cap and Thrivent High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Thrivent High Yield, you can compare the effects of market volatilities on Vanguard Small-cap and Thrivent High 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 Small-cap with a short position of Thrivent High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Thrivent High.
Diversification Opportunities for Vanguard Small-cap and Thrivent High
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Thrivent is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Thrivent High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent High Yield and Vanguard Small-cap 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 Small Cap Index are associated (or correlated) with Thrivent High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent High Yield has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Thrivent High go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Thrivent High
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 4.94 times more return on investment than Thrivent High. However, Vanguard Small-cap is 4.94 times more volatile than Thrivent High Yield. It trades about 0.09 of its potential returns per unit of risk. Thrivent High Yield is currently generating about 0.16 per unit of risk. If you would invest 10,423 in Vanguard Small Cap Index on August 27, 2024 and sell it today you would earn a total of 1,922 from holding Vanguard Small Cap Index or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Thrivent High Yield
Performance |
| Timeline |
| Vanguard Small Cap |
| Thrivent High Yield |
Vanguard Small-cap and Thrivent High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Thrivent High
The main advantage of trading using opposite Vanguard Small-cap and Thrivent High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Thrivent High 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 High will offset losses from the drop in Thrivent High's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard Reit Index | Vanguard Small-cap vs. Vanguard Value Index | Vanguard Small-cap vs. Vanguard Small Cap Value |
| Thrivent High vs. Thrivent Limited Maturity | Thrivent High vs. Thrivent Income Fund | Thrivent High vs. Thrivent Large Cap | Thrivent High vs. Thrivent Large Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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