Correlation Between Regional Bank and Victory Rs

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

By analyzing existing cross correlation between Regional Bank Fund and Victory Rs Small, you can compare the effects of market volatilities on Regional Bank and Victory Rs 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 Regional Bank with a short position of Victory Rs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Victory Rs.

Diversification Opportunities for Regional Bank and Victory Rs

0.96

Correlation Coefficient

Regional Bank  Victory Rs

Almost no diversification

The 3 months correlation between Regional and Victory is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Victory Rs Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Rs Small and Regional Bank 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 Regional Bank Fund are associated (or correlated) with Victory Rs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Rs Small has no effect on the direction of Regional Bank i.e., Regional Bank and Victory Rs go up and down completely randomly.

Pair Corralation between Regional Bank and Victory Rs

Assuming the 90 days horizon Regional Bank is expected to generate 1.04 times less return on investment than Victory Rs. In addition to that, Regional Bank is 1.6 times more volatile than Victory Rs Small. It trades about 0.14 of its total potential returns per unit of risk. Victory Rs Small is currently generating about 0.23 per unit of volatility. If you would invest  889.00  in Victory Rs Small on September 4, 2024 and sell it today you would earn a total of  181.00  from holding Victory Rs Small or generate 20.36% return on investment over 90 days.

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

Regional Bank Fund  vs.  Victory Rs Small

Regional Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Bank Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Regional Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Victory Rs Small

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Rs Small are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Victory Rs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regional Bank and Victory Rs

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

The idea behind Regional Bank Fund and Victory Rs Small 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.