Correlation Between Victory Integrity and AbbVie

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

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

Diversification Opportunities for Victory Integrity and AbbVie

-0.6

Correlation Coefficient

Victory Integrity  AbbVie

Excellent diversification

The 3 months correlation between Victory and AbbVie is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Victory Integrity Smallmid Cap and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and Victory Integrity 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 Integrity Smallmid Cap are associated (or correlated) with AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Victory Integrity i.e., Victory Integrity and AbbVie go up and down completely randomly.

Pair Corralation between Victory Integrity and AbbVie

Assuming the 90 days horizon Victory Integrity Smallmid Cap is expected to under-perform the AbbVie. But the mutual fund apears to be less risky and, when comparing its historical volatility, Victory Integrity Smallmid Cap is 1.25 times less risky than AbbVie. The mutual fund trades about -0.09 of its potential returns per unit of risk. The AbbVie Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  17,455  in AbbVie Inc on December 29, 2024 and sell it today you would earn a total of  2,817  from holding AbbVie Inc or generate 16.14% return on investment over 90 days.

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

Victory Integrity Smallmid Cap  vs.  AbbVie Inc

Victory Integrity

Risk-Adjusted Performance

Very Weak

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

AbbVie Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, AbbVie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victory Integrity and AbbVie

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

The idea behind Victory Integrity Smallmid Cap and AbbVie Inc 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.