Correlation Between Oklahoma Municipal and Victory Special

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Can any of the company-specific risk be diversified away by investing in both Oklahoma Municipal and Victory Special 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 Oklahoma Municipal and Victory Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oklahoma Municipal Fund and Victory Special Value, you can compare the effects of market volatilities on Oklahoma Municipal and Victory Special 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 Oklahoma Municipal with a short position of Victory Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Victory Special.

Diversification Opportunities for Oklahoma Municipal and Victory Special

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Oklahoma and Victory is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Victory Special Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Special Value and Oklahoma Municipal 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 Oklahoma Municipal Fund are associated (or correlated) with Victory Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Special Value has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Victory Special go up and down completely randomly.

Pair Corralation between Oklahoma Municipal and Victory Special

Assuming the 90 days horizon Oklahoma Municipal is expected to generate 9.74 times less return on investment than Victory Special. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 4.28 times less risky than Victory Special. It trades about 0.02 of its potential returns per unit of risk. Victory Special Value is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,595  in Victory Special Value on November 27, 2024 and sell it today you would earn a total of  524.00  from holding Victory Special Value or generate 20.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Oklahoma Municipal Fund  vs.  Victory Special Value

 Performance 
       Timeline  
Oklahoma Municipal 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Oklahoma Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oklahoma Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Victory Special Value 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Victory Special Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oklahoma Municipal and Victory Special Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oklahoma Municipal and Victory Special

The main advantage of trading using opposite Oklahoma Municipal and Victory Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma Municipal position performs unexpectedly, Victory Special 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 Special will offset losses from the drop in Victory Special's long position.
The idea behind Oklahoma Municipal Fund and Victory Special Value 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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