Correlation Between Victory High and Victory Integrity

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

By analyzing existing cross correlation between Victory High Yield and Victory Integrity Small Cap, you can compare the effects of market volatilities on Victory High and Victory Integrity 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 High with a short position of Victory Integrity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory High and Victory Integrity.

Diversification Opportunities for Victory High and Victory Integrity

0.04

Correlation Coefficient

Victory High  Victory Integrity

Significant diversification

The 3 months correlation between Victory and Victory is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Victory High Yield and Victory Integrity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity Small and Victory High 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 High Yield are associated (or correlated) with Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity Small has no effect on the direction of Victory High i.e., Victory High and Victory Integrity go up and down completely randomly.

Pair Corralation between Victory High and Victory Integrity

Assuming the 90 days horizon Victory High Yield is expected to generate 0.09 times more return on investment than Victory Integrity. However, Victory High Yield is 11.1 times less risky than Victory Integrity. It trades about 0.1 of its potential returns per unit of risk. Victory Integrity Small Cap is currently generating about -0.09 per unit of risk. If you would invest  538.00  in Victory High Yield on October 23, 2024 and sell it today you would earn a total of  7.00  from holding Victory High Yield or generate 1.3% return on investment over 90 days.

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

Victory High Yield  vs.  Victory Integrity Small Cap

Victory High Yield

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victory High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Victory High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Integrity Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Integrity Small Cap 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Victory High and Victory Integrity

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

The idea behind Victory High Yield and Victory Integrity Small Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.