Correlation Between Thrivent Municipal and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Thrivent Municipal and NYSE Composite 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 Municipal and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thrivent Municipal Bond and NYSE Composite, you can compare the effects of market volatilities on Thrivent Municipal and NYSE Composite 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 Municipal with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrivent Municipal and NYSE Composite.
Diversification Opportunities for Thrivent Municipal and NYSE Composite
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thrivent and NYSE is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Municipal Bond and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Thrivent Municipal 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 Municipal Bond are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Thrivent Municipal i.e., Thrivent Municipal and NYSE Composite go up and down completely randomly.
Pair Corralation between Thrivent Municipal and NYSE Composite
Assuming the 90 days horizon Thrivent Municipal Bond is expected to generate 0.29 times more return on investment than NYSE Composite. However, Thrivent Municipal Bond is 3.41 times less risky than NYSE Composite. It trades about 0.09 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.07 per unit of risk. If you would invest 1,014 in Thrivent Municipal Bond on February 7, 2024 and sell it today you would earn a total of 4.00 from holding Thrivent Municipal Bond or generate 0.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Thrivent Municipal Bond vs. NYSE Composite
Performance |
Timeline |
Thrivent Municipal and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Thrivent Municipal Bond
Pair trading matchups for Thrivent Municipal
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Thrivent Municipal and NYSE Composite
The main advantage of trading using opposite Thrivent Municipal and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Municipal position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Thrivent Municipal vs. Thrivent Partner Worldwide | Thrivent Municipal vs. Thrivent Partner Worldwide | Thrivent Municipal vs. Thrivent Large Cap | Thrivent Municipal vs. Thrivent Limited Maturity |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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