Correlation Between Victory Trivalent and American Beacon

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

By analyzing existing cross correlation between Victory Trivalent International and American Beacon Stephens, you can compare the effects of market volatilities on Victory Trivalent and American Beacon 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 Trivalent with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Trivalent and American Beacon.

Diversification Opportunities for Victory Trivalent and American Beacon

-0.45

Correlation Coefficient

Victory Trivalent  American Beacon

Very good diversification

The 3 months correlation between Victory and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Victory Trivalent Internationa and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens and Victory Trivalent 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 Trivalent International are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Victory Trivalent i.e., Victory Trivalent and American Beacon go up and down completely randomly.

Pair Corralation between Victory Trivalent and American Beacon

Assuming the 90 days horizon Victory Trivalent International is expected to generate 0.75 times more return on investment than American Beacon. However, Victory Trivalent International is 1.34 times less risky than American Beacon. It trades about 0.15 of its potential returns per unit of risk. American Beacon Stephens is currently generating about -0.11 per unit of risk. If you would invest  1,480  in Victory Trivalent International on December 21, 2024 and sell it today you would earn a total of  118.00  from holding Victory Trivalent International or generate 7.97% return on investment over 90 days.

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

Victory Trivalent Internationa  vs.  American Beacon Stephens

Victory Trivalent

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Trivalent International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Victory Trivalent may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Beacon Stephens

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Beacon Stephens has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Victory Trivalent and American Beacon

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

The idea behind Victory Trivalent International and American Beacon Stephens 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.