Correlation Between Cref Inflation-linked and Victory Floating

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

By analyzing existing cross correlation between Cref Inflation Linked Bond and Victory Floating Rate, you can compare the effects of market volatilities on Cref Inflation-linked and Victory Floating 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 Cref Inflation-linked with a short position of Victory Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Victory Floating.

Diversification Opportunities for Cref Inflation-linked and Victory Floating

0.19

Correlation Coefficient

Cref Inflation-linked  Victory Floating

Average diversification

The 3 months correlation between Cref and Victory is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Victory Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Floating Rate and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Victory Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Floating Rate has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Victory Floating go up and down completely randomly.

Pair Corralation between Cref Inflation-linked and Victory Floating

Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 1.03 times less return on investment than Victory Floating. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 1.12 times less risky than Victory Floating. It trades about 0.26 of its potential returns per unit of risk. Victory Floating Rate is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  799.00  in Victory Floating Rate on October 24, 2024 and sell it today you would earn a total of  7.00  from holding Victory Floating Rate or generate 0.88% return on investment over 90 days.

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

Cref Inflation Linked Bond  vs.  Victory Floating Rate

Cref Inflation Linked

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cref Inflation Linked Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Cref Inflation-linked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Floating Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Victory Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cref Inflation-linked and Victory Floating

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

The idea behind Cref Inflation Linked Bond and Victory Floating Rate 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.