Correlation Between Victory Strategic and Old Westbury

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

By analyzing existing cross correlation between Victory Strategic Allocation and Old Westbury Large, you can compare the effects of market volatilities on Victory Strategic and Old Westbury 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 Strategic with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Strategic and Old Westbury.

Diversification Opportunities for Victory Strategic and Old Westbury

0.86

Correlation Coefficient

Victory Strategic  Old Westbury

Very poor diversification

The 3 months correlation between VICTORY and Old is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Victory Strategic Allocation and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Victory Strategic 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 Strategic Allocation are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Victory Strategic i.e., Victory Strategic and Old Westbury go up and down completely randomly.

Pair Corralation between Victory Strategic and Old Westbury

Assuming the 90 days horizon Victory Strategic is expected to generate 1.93 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Victory Strategic Allocation is 1.51 times less risky than Old Westbury. It trades about 0.13 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,004  in Old Westbury Large on August 31, 2024 and sell it today you would earn a total of  134.00  from holding Old Westbury Large or generate 6.69% return on investment over 90 days.

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

Victory Strategic Allocation  vs.  Old Westbury Large

Victory Strategic

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Strategic Allocation are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Victory Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Old Westbury Large

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Large are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Old Westbury may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Victory Strategic and Old Westbury

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

The idea behind Victory Strategic Allocation and Old Westbury Large 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.