Correlation Between IShares Core and Victory Portfolios

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

By analyzing existing cross correlation between iShares Core Total and Victory Portfolios II, you can compare the effects of market volatilities on IShares Core and Victory Portfolios 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 IShares Core with a short position of Victory Portfolios. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Victory Portfolios.

Diversification Opportunities for IShares Core and Victory Portfolios

0.8

Correlation Coefficient

IShares Core  Victory Portfolios

Very poor diversification

The 3 months correlation between IShares and Victory is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and Victory Portfolios II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Portfolios and IShares Core 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 iShares Core Total are associated (or correlated) with Victory Portfolios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Portfolios has no effect on the direction of IShares Core i.e., IShares Core and Victory Portfolios go up and down completely randomly.

Pair Corralation between IShares Core and Victory Portfolios

Given the investment horizon of 90 days IShares Core is expected to generate 1.11 times less return on investment than Victory Portfolios. But when comparing it to its historical volatility, iShares Core Total is 1.03 times less risky than Victory Portfolios. It trades about 0.14 of its potential returns per unit of risk. Victory Portfolios II is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,121  in Victory Portfolios II on December 29, 2024 and sell it today you would earn a total of  56.00  from holding Victory Portfolios II or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

iShares Core Total  vs.  Victory Portfolios II

iShares Core Total

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Total are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Portfolios

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Portfolios II are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Victory Portfolios is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and Victory Portfolios

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

The idea behind iShares Core Total and Victory Portfolios II 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.