Correlation Between Multimanager Lifestyle and Victory High

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

By analyzing existing cross correlation between Multimanager Lifestyle Aggressive and Victory High Yield, you can compare the effects of market volatilities on Multimanager Lifestyle and Victory High 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 Multimanager Lifestyle with a short position of Victory High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Victory High.

Diversification Opportunities for Multimanager Lifestyle and Victory High

0.89

Correlation Coefficient

Multimanager Lifestyle  Victory High

Very poor diversification

The 3 months correlation between Multimanager and Victory is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Aggress and Victory High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory High Yield and Multimanager Lifestyle 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 Multimanager Lifestyle Aggressive are associated (or correlated) with Victory High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory High Yield has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Victory High go up and down completely randomly.

Pair Corralation between Multimanager Lifestyle and Victory High

Assuming the 90 days horizon Multimanager Lifestyle Aggressive is expected to generate 3.36 times more return on investment than Victory High. However, Multimanager Lifestyle is 3.36 times more volatile than Victory High Yield. It trades about 0.14 of its potential returns per unit of risk. Victory High Yield is currently generating about 0.27 per unit of risk. If you would invest  1,470  in Multimanager Lifestyle Aggressive on September 12, 2024 and sell it today you would earn a total of  80.00  from holding Multimanager Lifestyle Aggressive or generate 5.44% return on investment over 90 days.

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

Multimanager Lifestyle Aggress  vs.  Victory High Yield

Multimanager Lifestyle

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multimanager Lifestyle Aggressive are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multimanager Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory High Yield

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory High Yield are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Victory High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multimanager Lifestyle and Victory High

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

The idea behind Multimanager Lifestyle Aggressive and Victory High Yield 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.