Correlation Between Victory Integrity and Victory Diversified

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

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

Diversification Opportunities for Victory Integrity and Victory Diversified

0.99

Correlation Coefficient

Victory Integrity  Victory Diversified

No risk reduction

The 3 months correlation between Victory and Victory is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Victory Integrity Discovery and Victory Diversified Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Diversified Stock and Victory Integrity 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 Integrity Discovery are associated (or correlated) with Victory Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Diversified Stock has no effect on the direction of Victory Integrity i.e., Victory Integrity and Victory Diversified go up and down completely randomly.

Pair Corralation between Victory Integrity and Victory Diversified

Assuming the 90 days horizon Victory Integrity Discovery is expected to under-perform the Victory Diversified. In addition to that, Victory Integrity is 1.03 times more volatile than Victory Diversified Stock. It trades about -0.18 of its total potential returns per unit of risk. Victory Diversified Stock is currently generating about -0.14 per unit of volatility. If you would invest  2,484  in Victory Diversified Stock on December 2, 2024 and sell it today you would lose (305.00) from holding Victory Diversified Stock or give up 12.28% of portfolio value over 90 days.

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

Victory Integrity Discovery  vs.  Victory Diversified Stock

Victory Integrity

Risk-Adjusted Performance

Very Weak

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

Victory Diversified Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Diversified Stock 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Victory Integrity and Victory Diversified

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

The idea behind Victory Integrity Discovery and Victory Diversified Stock 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.