Correlation Between CaliberCos and Victory Capital

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

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

Diversification Opportunities for CaliberCos and Victory Capital

-0.6

Correlation Coefficient

CaliberCos  Victory Capital

Excellent diversification

The 3 months correlation between CaliberCos and Victory is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CaliberCos Class A 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 CaliberCos 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 CaliberCos Class A 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 CaliberCos i.e., CaliberCos and Victory Capital go up and down completely randomly.

Pair Corralation between CaliberCos and Victory Capital

Considering the 90-day investment horizon CaliberCos Class A is expected to generate 2.65 times more return on investment than Victory Capital. However, CaliberCos is 2.65 times more volatile than Victory Capital Holdings. It trades about 0.35 of its potential returns per unit of risk. Victory Capital Holdings is currently generating about 0.05 per unit of risk. If you would invest  52.00  in CaliberCos Class A on October 8, 2024 and sell it today you would earn a total of  18.00  from holding CaliberCos Class A or generate 34.62% return on investment over 90 days.

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

CaliberCos Class A  vs.  Victory Capital Holdings

CaliberCos Class A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CaliberCos Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, CaliberCos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Victory Capital Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Capital Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Victory Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CaliberCos and Victory Capital

The main advantage of trading using opposite CaliberCos and Victory Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CaliberCos 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 CaliberCos Class A 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.