Correlation Between Victory Capital and WisdomTree

Can any of the company-specific risk be diversified away by investing in both Victory Capital and WisdomTree 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 WisdomTree 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 WisdomTree, you can compare the effects of market volatilities on Victory Capital and WisdomTree 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 WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Capital and WisdomTree.

Diversification Opportunities for Victory Capital and WisdomTree

0.38

Correlation Coefficient

Victory Capital  WisdomTree

Weak diversification

The 3 months correlation between Victory and WisdomTree is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Victory Capital Holdings and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Victory Capital i.e., Victory Capital and WisdomTree go up and down completely randomly.

Pair Corralation between Victory Capital and WisdomTree

Given the investment horizon of 90 days Victory Capital Holdings is expected to generate 1.43 times more return on investment than WisdomTree. However, Victory Capital is 1.43 times more volatile than WisdomTree. It trades about -0.04 of its potential returns per unit of risk. WisdomTree is currently generating about -0.27 per unit of risk. If you would invest  6,869  in Victory Capital Holdings on December 1, 2024 and sell it today you would lose (465.00) from holding Victory Capital Holdings or give up 6.77% of portfolio value over 90 days.

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

Victory Capital Holdings  vs.  WisdomTree

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.

WisdomTree

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Victory Capital and WisdomTree

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

The idea behind Victory Capital Holdings and WisdomTree 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..