Correlation Between Victory Floating and Victory Diversified

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

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

Diversification Opportunities for Victory Floating and Victory Diversified

-0.32

Correlation Coefficient

Victory Floating  Victory Diversified

Very good diversification

The 3 months correlation between Victory and Victory is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Victory Floating Rate and Victory Diversified Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Diversified Stock and Victory Floating 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 Floating Rate are associated (or correlated) with Victory Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Diversified Stock has no effect on the direction of Victory Floating i.e., Victory Floating and Victory Diversified go up and down completely randomly.

Pair Corralation between Victory Floating and Victory Diversified

Assuming the 90 days horizon Victory Floating Rate is expected to generate 0.18 times more return on investment than Victory Diversified. However, Victory Floating Rate is 5.69 times less risky than Victory Diversified. It trades about 0.14 of its potential returns per unit of risk. Victory Diversified Stock is currently generating about -0.09 per unit of risk. If you would invest  787.00  in Victory Floating Rate on December 29, 2024 and sell it today you would earn a total of  13.00  from holding Victory Floating Rate or generate 1.65% return on investment over 90 days.

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

Victory Floating Rate  vs.  Victory Diversified Stock

Victory Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Floating Rate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Victory Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Diversified Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Diversified Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Floating and Victory Diversified

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

The idea behind Victory Floating Rate and Victory Diversified Stock 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.