Correlation Between Intermediate-term and Victory Global

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

By analyzing existing cross correlation between Intermediate Term Bond Fund and Victory Global Natural, you can compare the effects of market volatilities on Intermediate-term and Victory Global 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 Intermediate-term with a short position of Victory Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate-term and Victory Global.

Diversification Opportunities for Intermediate-term and Victory Global

0.18

Correlation Coefficient

Intermediate-term  Victory Global

Average diversification

The 3 months correlation between Intermediate-term and Victory is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund and Victory Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Global Natural and Intermediate-term 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 Intermediate Term Bond Fund are associated (or correlated) with Victory Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Global Natural has no effect on the direction of Intermediate-term i.e., Intermediate-term and Victory Global go up and down completely randomly.

Pair Corralation between Intermediate-term and Victory Global

Assuming the 90 days horizon Intermediate Term Bond Fund is expected to generate 0.22 times more return on investment than Victory Global. However, Intermediate Term Bond Fund is 4.45 times less risky than Victory Global. It trades about 0.05 of its potential returns per unit of risk. Victory Global Natural is currently generating about -0.17 per unit of risk. If you would invest  915.00  in Intermediate Term Bond Fund on December 5, 2024 and sell it today you would earn a total of  9.00  from holding Intermediate Term Bond Fund or generate 0.98% return on investment over 90 days.

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

Intermediate Term Bond Fund  vs.  Victory Global Natural

Intermediate Term Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Term Bond Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Intermediate-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Global Natural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Global Natural 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 Intermediate-term and Victory Global

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

The idea behind Intermediate Term Bond Fund and Victory Global Natural 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 Transaction History module to view history of all your transactions and understand their impact on performance.