Correlation Between Nelnet and Victory Capital

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

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

Diversification Opportunities for Nelnet and Victory Capital

-0.46

Correlation Coefficient

Nelnet  Victory Capital

Very good diversification

The 3 months correlation between Nelnet and Victory is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Victory Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Capital Holdings and Nelnet 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 Nelnet Inc are associated (or correlated) with Victory Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Capital Holdings has no effect on the direction of Nelnet i.e., Nelnet and Victory Capital go up and down completely randomly.

Pair Corralation between Nelnet and Victory Capital

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.49 times more return on investment than Victory Capital. However, Nelnet Inc is 2.04 times less risky than Victory Capital. It trades about -0.12 of its potential returns per unit of risk. Victory Capital Holdings is currently generating about -0.06 per unit of risk. If you would invest  10,830  in Nelnet Inc on October 9, 2024 and sell it today you would lose (269.00) from holding Nelnet Inc or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Nelnet Inc  vs.  Victory Capital Holdings

Nelnet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nelnet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nelnet is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Victory Capital Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Capital Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Victory Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nelnet and Victory Capital

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

The idea behind Nelnet Inc and Victory Capital Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.