Correlation Between Tax-managed and Victory Integrity

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

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

Diversification Opportunities for Tax-managed and Victory Integrity

0.75

Correlation Coefficient

Tax-managed  Victory Integrity

Poor diversification

The 3 months correlation between Tax-managed and Victory is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Mid Small 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 Tax-managed 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 Tax Managed Mid Small 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 Tax-managed i.e., Tax-managed and Victory Integrity go up and down completely randomly.

Pair Corralation between Tax-managed and Victory Integrity

Assuming the 90 days horizon Tax Managed Mid Small is expected to generate 0.81 times more return on investment than Victory Integrity. However, Tax Managed Mid Small is 1.24 times less risky than Victory Integrity. It trades about 0.04 of its potential returns per unit of risk. Victory Integrity Small Cap is currently generating about -0.01 per unit of risk. If you would invest  3,553  in Tax Managed Mid Small on October 11, 2024 and sell it today you would earn a total of  643.00  from holding Tax Managed Mid Small or generate 18.1% return on investment over 90 days.

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

Tax Managed Mid Small  vs.  Victory Integrity Small Cap

Tax Managed Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tax Managed Mid Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tax-managed 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 Tax-managed and Victory Integrity

The main advantage of trading using opposite Tax-managed and Victory Integrity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-managed 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 Tax Managed Mid Small 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.