Correlation Between Victory Incore and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Victory Incore and Federated Strategic 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 Incore and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Incore Fund and Federated Strategic Income, you can compare the effects of market volatilities on Victory Incore and Federated Strategic 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 Incore with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Incore and Federated Strategic.
Diversification Opportunities for Victory Incore and Federated Strategic
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Victory and Federated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Victory Incore Fund and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic and Victory Incore 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 Incore Fund are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Victory Incore i.e., Victory Incore and Federated Strategic go up and down completely randomly.
Pair Corralation between Victory Incore and Federated Strategic
Assuming the 90 days horizon Victory Incore is expected to generate 4.17 times less return on investment than Federated Strategic. But when comparing it to its historical volatility, Victory Incore Fund is 2.43 times less risky than Federated Strategic. It trades about 0.14 of its potential returns per unit of risk. Federated Strategic Income is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 815.00 in Federated Strategic Income on November 3, 2024 and sell it today you would earn a total of 10.00 from holding Federated Strategic Income or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Incore Fund vs. Federated Strategic Income
Performance |
| Timeline |
| Victory Incore |
| Federated Strategic |
Victory Incore and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Incore and Federated Strategic
The main advantage of trading using opposite Victory Incore and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Incore position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| Victory Incore vs. Columbia Convertible Securities | Victory Incore vs. Lord Abbett Convertible | Victory Incore vs. Putnam Convertible Securities | Victory Incore vs. Allianzgi Convertible Income |
| Federated Strategic vs. Federated Government Income | Federated Strategic vs. Us Government Securities | Federated Strategic vs. Payden Government Fund | Federated Strategic vs. Davis Government Bond |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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