Correlation Between Victory Strategic and Pimco Rae

Can any of the company-specific risk be diversified away by investing in both Victory Strategic and Pimco Rae 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 Pimco Rae 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 Pimco Rae Worldwide, you can compare the effects of market volatilities on Victory Strategic and Pimco Rae 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 Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Strategic and Pimco Rae.

Diversification Opportunities for Victory Strategic and Pimco Rae

0.0

Correlation Coefficient

Victory Strategic  Pimco Rae

Pay attention - limited upside

The 3 months correlation between Victory and Pimco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Victory Strategic Allocation and Pimco Rae Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Worldwide 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 Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Worldwide has no effect on the direction of Victory Strategic i.e., Victory Strategic and Pimco Rae go up and down completely randomly.

Pair Corralation between Victory Strategic and Pimco Rae

Assuming the 90 days horizon Victory Strategic Allocation is expected to under-perform the Pimco Rae. In addition to that, Victory Strategic is 1.0 times more volatile than Pimco Rae Worldwide. It trades about -0.02 of its total potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.21 per unit of volatility. If you would invest  742.00  in Pimco Rae Worldwide on December 29, 2024 and sell it today you would earn a total of  54.00  from holding Pimco Rae Worldwide or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Victory Strategic Allocation  vs.  Pimco Rae Worldwide

Victory Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Strategic Allocation has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pimco Rae Worldwide

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Pimco Rae may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Victory Strategic and Pimco Rae

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

The idea behind Victory Strategic Allocation and Pimco Rae Worldwide 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.