Correlation Between Victory Capital and Federated Premier

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

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

Diversification Opportunities for Victory Capital and Federated Premier

0.33

Correlation Coefficient

Victory Capital  Federated Premier

Weak diversification

The 3 months correlation between Victory and Federated is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Victory Capital Holdings and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Victory Capital 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 Capital Holdings are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Victory Capital i.e., Victory Capital and Federated Premier go up and down completely randomly.

Pair Corralation between Victory Capital and Federated Premier

Given the investment horizon of 90 days Victory Capital Holdings is expected to under-perform the Federated Premier. In addition to that, Victory Capital is 3.74 times more volatile than Federated Premier Municipal. It trades about -0.05 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.24 per unit of volatility. If you would invest  1,104  in Federated Premier Municipal on December 1, 2024 and sell it today you would earn a total of  30.00  from holding Federated Premier Municipal or generate 2.72% return on investment over 90 days.

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

Victory Capital Holdings  vs.  Federated Premier Municipal

Victory Capital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Victory Capital is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Federated Premier

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Premier Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Victory Capital and Federated Premier

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

The idea behind Victory Capital Holdings and Federated Premier Municipal 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..