Correlation Between Western Acquisition and Victory Capital

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

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

Diversification Opportunities for Western Acquisition and Victory Capital

-0.42

Correlation Coefficient

Western Acquisition  Victory Capital

Very good diversification

The 3 months correlation between Western and Victory is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Victory Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Capital Holdings and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with Victory Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Capital Holdings has no effect on the direction of Western Acquisition i.e., Western Acquisition and Victory Capital go up and down completely randomly.

Pair Corralation between Western Acquisition and Victory Capital

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.81 times more return on investment than Victory Capital. However, Western Acquisition Ventures is 1.23 times less risky than Victory Capital. It trades about 0.32 of its potential returns per unit of risk. Victory Capital Holdings is currently generating about -0.05 per unit of risk. If you would invest  1,081  in Western Acquisition Ventures on October 11, 2024 and sell it today you would earn a total of  139.00  from holding Western Acquisition Ventures or generate 12.86% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Victory Capital Holdings

Western Acquisition

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Victory Capital Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Capital Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Victory Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Western Acquisition and Victory Capital

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

The idea behind Western Acquisition Ventures and Victory Capital Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.