Correlation Between VictoryShares Discovery and AlphaMark Actively

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

By analyzing existing cross correlation between VictoryShares Discovery Enhanced and AlphaMark Actively Managed, you can compare the effects of market volatilities on VictoryShares Discovery and AlphaMark Actively 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 VictoryShares Discovery with a short position of AlphaMark Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares Discovery and AlphaMark Actively.

Diversification Opportunities for VictoryShares Discovery and AlphaMark Actively

0.99

Correlation Coefficient

VictoryShares Discovery  AlphaMark Actively

No risk reduction

The 3 months correlation between VictoryShares and AlphaMark is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares Discovery Enhanc and AlphaMark Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaMark Actively and VictoryShares Discovery 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 VictoryShares Discovery Enhanced are associated (or correlated) with AlphaMark Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaMark Actively has no effect on the direction of VictoryShares Discovery i.e., VictoryShares Discovery and AlphaMark Actively go up and down completely randomly.

Pair Corralation between VictoryShares Discovery and AlphaMark Actively

Considering the 90-day investment horizon VictoryShares Discovery is expected to generate 1.01 times less return on investment than AlphaMark Actively. But when comparing it to its historical volatility, VictoryShares Discovery Enhanced is 1.02 times less risky than AlphaMark Actively. It trades about 0.17 of its potential returns per unit of risk. AlphaMark Actively Managed is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,106  in AlphaMark Actively Managed on September 5, 2024 and sell it today you would earn a total of  424.00  from holding AlphaMark Actively Managed or generate 13.65% return on investment over 90 days.

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

VictoryShares Discovery Enhanc  vs.  AlphaMark Actively Managed

VictoryShares Discovery

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares Discovery Enhanced are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, VictoryShares Discovery reported solid returns over the last few months and may actually be approaching a breakup point.

AlphaMark Actively

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaMark Actively Managed are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, AlphaMark Actively reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VictoryShares Discovery and AlphaMark Actively

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

The idea behind VictoryShares Discovery Enhanced and AlphaMark Actively Managed 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..