Correlation Between Victory Diversified and Victory High

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

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

Diversification Opportunities for Victory Diversified and Victory High

0.14

Correlation Coefficient

Victory Diversified  Victory High

Average diversification

The 3 months correlation between Victory and Victory is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Victory Diversified Stock and Victory High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory High Yield and Victory Diversified 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 Diversified Stock are associated (or correlated) with Victory High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory High Yield has no effect on the direction of Victory Diversified i.e., Victory Diversified and Victory High go up and down completely randomly.

Pair Corralation between Victory Diversified and Victory High

Assuming the 90 days horizon Victory Diversified Stock is expected to under-perform the Victory High. In addition to that, Victory Diversified is 7.36 times more volatile than Victory High Yield. It trades about -0.14 of its total potential returns per unit of risk. Victory High Yield is currently generating about 0.08 per unit of volatility. If you would invest  540.00  in Victory High Yield on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Victory High Yield or generate 0.93% return on investment over 90 days.

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

Victory Diversified Stock  vs.  Victory High Yield

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 technical and fundamental 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 High Yield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victory High Yield are ranked lower than 6 (%) 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.

Pair Trading with Victory Diversified and Victory High

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

The idea behind Victory Diversified Stock and Victory High Yield 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.