Correlation Between Victory Capital and Redwood Trust
Can any of the company-specific risk be diversified away by investing in both Victory Capital and Redwood Trust 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 Redwood Trust 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 Redwood Trust, you can compare the effects of market volatilities on Victory Capital and Redwood Trust 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 Redwood Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Capital and Redwood Trust.
Diversification Opportunities for Victory Capital and Redwood Trust
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Victory and Redwood is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Victory Capital Holdings and Redwood Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Trust 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 Redwood Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Trust has no effect on the direction of Victory Capital i.e., Victory Capital and Redwood Trust go up and down completely randomly.
Pair Corralation between Victory Capital and Redwood Trust
Given the investment horizon of 90 days Victory Capital Holdings is expected to generate 2.99 times more return on investment than Redwood Trust. However, Victory Capital is 2.99 times more volatile than Redwood Trust. It trades about 0.23 of its potential returns per unit of risk. Redwood Trust is currently generating about -0.06 per unit of risk. If you would invest 6,012 in Victory Capital Holdings on September 2, 2024 and sell it today you would earn a total of 936.00 from holding Victory Capital Holdings or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Capital Holdings vs. Redwood Trust
Performance |
| Timeline |
| Victory Capital Holdings |
| Redwood Trust |
Victory Capital and Redwood Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Capital and Redwood Trust
The main advantage of trading using opposite Victory Capital and Redwood Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Capital position performs unexpectedly, Redwood Trust 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 Redwood Trust will offset losses from the drop in Redwood Trust's long position.| Victory Capital vs. Federated Premier Municipal | Victory Capital vs. Blackrock Muniyield | Victory Capital vs. Diamond Hill Investment | Victory Capital vs. NXG NextGen Infrastructure |
| Redwood Trust vs. Two Harbors Investments | Redwood Trust vs. AG Mortgage Investment | Redwood Trust vs. Invesco Mortgage Capital | Redwood Trust vs. MFA Financial |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |