Correlation Between VictoryShares 500 and Vident Core

Can any of the company-specific risk be diversified away by investing in both VictoryShares 500 and Vident Core 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 500 and Vident Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VictoryShares 500 Enhanced and Vident Core Equity, you can compare the effects of market volatilities on VictoryShares 500 and Vident Core 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 500 with a short position of Vident Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares 500 and Vident Core.

Diversification Opportunities for VictoryShares 500 and Vident Core

0.85

Correlation Coefficient

VictoryShares 500  Vident Core

Very poor diversification

The 3 months correlation between VictoryShares and Vident is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares 500 Enhanced and Vident Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident Core Equity and VictoryShares 500 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 500 Enhanced are associated (or correlated) with Vident Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident Core Equity has no effect on the direction of VictoryShares 500 i.e., VictoryShares 500 and Vident Core go up and down completely randomly.

Pair Corralation between VictoryShares 500 and Vident Core

Considering the 90-day investment horizon VictoryShares 500 Enhanced is expected to under-perform the Vident Core. But the etf apears to be less risky and, when comparing its historical volatility, VictoryShares 500 Enhanced is 1.24 times less risky than Vident Core. The etf trades about -0.31 of its potential returns per unit of risk. The Vident Core Equity is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  6,188  in Vident Core Equity on October 7, 2024 and sell it today you would lose (254.00) from holding Vident Core Equity or give up 4.1% of portfolio value over 90 days.

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

VictoryShares 500 Enhanced  vs.  Vident Core Equity

VictoryShares 500

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares 500 Enhanced are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, VictoryShares 500 is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vident Core Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vident Core Equity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Vident Core is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VictoryShares 500 and Vident Core

The main advantage of trading using opposite VictoryShares 500 and Vident Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares 500 position performs unexpectedly, Vident Core 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 Vident Core will offset losses from the drop in Vident Core's long position.

The idea behind VictoryShares 500 Enhanced and Vident Core Equity 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.