Correlation Between Via Renewables and Victory Capital

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

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

Diversification Opportunities for Via Renewables and Victory Capital

0.73

Correlation Coefficient

Via Renewables  Victory Capital

Poor diversification

The 3 months correlation between Via and Victory is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables 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 Via Renewables 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 Via Renewables 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 Via Renewables i.e., Via Renewables and Victory Capital go up and down completely randomly.

Pair Corralation between Via Renewables and Victory Capital

Assuming the 90 days horizon Via Renewables is expected to generate 1.14 times less return on investment than Victory Capital. But when comparing it to its historical volatility, Via Renewables is 2.68 times less risky than Victory Capital. It trades about 0.34 of its potential returns per unit of risk. Victory Capital Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,504  in Victory Capital Holdings on September 28, 2024 and sell it today you would earn a total of  1,204  from holding Victory Capital Holdings or generate 21.88% return on investment over 90 days.

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

Via Renewables  vs.  Victory Capital Holdings

Via Renewables

Risk-Adjusted Performance

26 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Victory Capital Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Capital Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Victory Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Via Renewables and Victory Capital

The main advantage of trading using opposite Via Renewables and Victory Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables 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 Via Renewables 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..