Correlation Between Victory Munder and Dana Large

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

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

Diversification Opportunities for Victory Munder and Dana Large

0.14

Correlation Coefficient

Victory Munder  Dana Large

Average diversification

The 3 months correlation between Victory and Dana is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Victory Munder Mid Cap and Dana Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Large Cap and Victory Munder 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 Victory Munder Mid Cap are associated (or correlated) with Dana Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Large Cap has no effect on the direction of Victory Munder i.e., Victory Munder and Dana Large go up and down completely randomly.

Pair Corralation between Victory Munder and Dana Large

Assuming the 90 days horizon Victory Munder Mid Cap is expected to generate 0.93 times more return on investment than Dana Large. However, Victory Munder Mid Cap is 1.07 times less risky than Dana Large. It trades about -0.06 of its potential returns per unit of risk. Dana Large Cap is currently generating about -0.1 per unit of risk. 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

Victory Munder Mid Cap  vs.  Dana Large Cap

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.

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.

Pair Trading with Victory Munder and Dana Large

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

The idea behind Victory Munder Mid Cap and Dana Large 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.