Correlation Between Nasdaq 100 and Victory Munder

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Victory Munder 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 Nasdaq 100 and Victory Munder into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Fund Class and Victory Munder Multi Cap, you can compare the effects of market volatilities on Nasdaq 100 and Victory Munder 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 Nasdaq 100 with a short position of Victory Munder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Victory Munder.

Diversification Opportunities for Nasdaq 100 and Victory Munder

0.94

Correlation Coefficient

Nasdaq 100  Victory Munder

Almost no diversification

The 3 months correlation between Nasdaq and Victory is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Class and Victory Munder Multi Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Munder Multi and Nasdaq 100 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 Nasdaq 100 Fund Class are associated (or correlated) with Victory Munder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Munder Multi has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Victory Munder go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Victory Munder

Assuming the 90 days horizon Nasdaq 100 is expected to generate 1.39 times less return on investment than Victory Munder. In addition to that, Nasdaq 100 is 1.07 times more volatile than Victory Munder Multi Cap. It trades about 0.19 of its total potential returns per unit of risk. Victory Munder Multi Cap is currently generating about 0.29 per unit of volatility. If you would invest  3,793  in Victory Munder Multi Cap on September 4, 2024 and sell it today you would earn a total of  219.00  from holding Victory Munder Multi Cap or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Nasdaq 100 Fund Class  vs.  Victory Munder Multi Cap

Nasdaq 100 Fund

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Fund Class are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Victory Munder Multi

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Munder Multi Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Victory Munder may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq 100 and Victory Munder

The main advantage of trading using opposite Nasdaq 100 and Victory Munder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Victory Munder 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 Munder will offset losses from the drop in Victory Munder's long position.

The idea behind Nasdaq 100 Fund Class and Victory Munder Multi 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.