Correlation Between Absolute Convertible and Victory Munder

Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Victory Munder 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 Absolute Convertible and Victory Munder into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absolute Convertible Arbitrage and Victory Munder Multi Cap, you can compare the effects of market volatilities on Absolute Convertible and Victory Munder 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 Absolute Convertible with a short position of Victory Munder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Victory Munder.

Diversification Opportunities for Absolute Convertible and Victory Munder

0.94

Correlation Coefficient

Absolute Convertible  Victory Munder

Almost no diversification

The 3 months correlation between Absolute and Victory is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Victory Munder Multi Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Munder Multi and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Victory Munder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Munder Multi has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Victory Munder go up and down completely randomly.

Pair Corralation between Absolute Convertible and Victory Munder

Assuming the 90 days horizon Absolute Convertible is expected to generate 2.98 times less return on investment than Victory Munder. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 15.32 times less risky than Victory Munder. It trades about 0.44 of its potential returns per unit of risk. Victory Munder Multi Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,761  in Victory Munder Multi Cap on September 12, 2024 and sell it today you would earn a total of  1,346  from holding Victory Munder Multi Cap or generate 28.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Absolute Convertible Arbitrage  vs.  Victory Munder Multi Cap

Absolute Convertible

Risk-Adjusted Performance

40 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Convertible Arbitrage are ranked lower than 40 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Absolute Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Munder Multi

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Munder Multi Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Victory Munder may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Absolute Convertible and Victory Munder

The main advantage of trading using opposite Absolute Convertible and Victory Munder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Victory Munder 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 Victory Munder will offset losses from the drop in Victory Munder's long position.

The idea behind Absolute Convertible Arbitrage and Victory Munder Multi 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.