Correlation Between VictoryShares and VictoryShares International

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

By analyzing existing cross correlation between VictoryShares EQ Income and VictoryShares International High, you can compare the effects of market volatilities on VictoryShares and VictoryShares International 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 VictoryShares with a short position of VictoryShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares and VictoryShares International.

Diversification Opportunities for VictoryShares and VictoryShares International

-0.08

Correlation Coefficient

VictoryShares  VictoryShares International

Good diversification

The 3 months correlation between VictoryShares and VictoryShares is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares EQ Income and VictoryShares International Hi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares International and VictoryShares 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 VictoryShares EQ Income are associated (or correlated) with VictoryShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares International has no effect on the direction of VictoryShares i.e., VictoryShares and VictoryShares International go up and down completely randomly.

Pair Corralation between VictoryShares and VictoryShares International

Considering the 90-day investment horizon VictoryShares is expected to generate 94.96 times less return on investment than VictoryShares International. But when comparing it to its historical volatility, VictoryShares EQ Income is 72.1 times less risky than VictoryShares International. It trades about 0.04 of its potential returns per unit of risk. VictoryShares International High is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,649  in VictoryShares International High on September 15, 2024 and sell it today you would earn a total of  3,177,351  from holding VictoryShares International High or generate 119945.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.54%
Values	Daily Returns

VictoryShares EQ Income  vs.  VictoryShares International Hi

VictoryShares EQ Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares EQ Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, VictoryShares is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

VictoryShares International

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days VictoryShares International High has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak forward indicators, VictoryShares International exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VictoryShares and VictoryShares International

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

The idea behind VictoryShares EQ Income and VictoryShares International High 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.