Correlation Between Dana Large and Victory Munder

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

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

Diversification Opportunities for Dana Large and Victory Munder

0.14

Correlation Coefficient

Dana Large  Victory Munder

Average diversification

The 3 months correlation between Dana and Victory is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Victory Munder Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Munder Mid and Dana Large 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 Dana Large Cap 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 Mid has no effect on the direction of Dana Large i.e., Dana Large and Victory Munder go up and down completely randomly.

Pair Corralation between Dana Large and Victory Munder

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Victory Munder. In addition to that, Dana Large is 1.07 times more volatile than Victory Munder Mid Cap. It trades about -0.1 of its total potential returns per unit of risk. Victory Munder Mid Cap is currently generating about -0.06 per unit of volatility. If you would invest  1,235  in Victory Munder Mid Cap on December 29, 2024 and sell it today you would lose (46.00) from holding Victory Munder Mid Cap or give up 3.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Dana Large Cap  vs.  Victory Munder Mid Cap

Dana Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Victory Munder Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Munder Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Victory Munder is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dana Large and Victory Munder

The main advantage of trading using opposite Dana Large and Victory Munder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large 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 Dana Large Cap and Victory Munder Mid 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .