Correlation Between Intermediate Term and Victory Integrity

Can any of the company-specific risk be diversified away by investing in both Intermediate Term 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 Intermediate Term and Victory Integrity 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 Integrity Small Cap, you can compare the effects of market volatilities on Intermediate Term 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 Intermediate Term with a short position of Victory Integrity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Term and Victory Integrity.

Diversification Opportunities for Intermediate Term and Victory Integrity

0.69

Correlation Coefficient

Intermediate Term  Victory Integrity

Poor diversification

The 3 months correlation between Intermediate and Victory is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund 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 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 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 Intermediate Term i.e., Intermediate Term and Victory Integrity go up and down completely randomly.

Pair Corralation between Intermediate Term and Victory Integrity

Assuming the 90 days horizon Intermediate Term Bond Fund is expected to generate 0.15 times more return on investment than Victory Integrity. However, Intermediate Term Bond Fund is 6.84 times less risky than Victory Integrity. It trades about -0.02 of its potential returns per unit of risk. Victory Integrity Small Cap is currently generating about -0.09 per unit of risk. If you would invest  907.00  in Intermediate Term Bond Fund on October 26, 2024 and sell it today you would lose (3.00) from holding Intermediate Term Bond Fund or give up 0.33% of portfolio value over 90 days.

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

Intermediate Term Bond Fund  vs.  Victory Integrity Small Cap

Intermediate Term Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Term Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. 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 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 forward 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 Intermediate Term and Victory Integrity

The main advantage of trading using opposite Intermediate Term and Victory Integrity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Term 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 Intermediate Term Bond Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.