Correlation Between Carlyle and Victory Capital

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

By analyzing existing cross correlation between Carlyle Group and Victory Capital Holdings, you can compare the effects of market volatilities on Carlyle and Victory Capital 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 Carlyle with a short position of Victory Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Victory Capital.

Diversification Opportunities for Carlyle and Victory Capital

0.25

Correlation Coefficient

Carlyle  Victory Capital

Modest diversification

The 3 months correlation between Carlyle and Victory is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Victory Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Capital Holdings and Carlyle 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 Carlyle Group are associated (or correlated) with Victory Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Capital Holdings has no effect on the direction of Carlyle i.e., Carlyle and Victory Capital go up and down completely randomly.

Pair Corralation between Carlyle and Victory Capital

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.95 times more return on investment than Victory Capital. However, Carlyle Group is 1.06 times less risky than Victory Capital. It trades about -0.06 of its potential returns per unit of risk. Victory Capital Holdings is currently generating about -0.06 per unit of risk. If you would invest  5,287  in Carlyle Group on November 28, 2024 and sell it today you would lose (398.00) from holding Carlyle Group or give up 7.53% of portfolio value over 90 days.

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

Carlyle Group  vs.  Victory Capital Holdings

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Victory Capital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Carlyle and Victory Capital

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

The idea behind Carlyle Group and Victory Capital Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.