Correlation Between Victory Select and Vanguard International

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

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

Diversification Opportunities for Victory Select and Vanguard International

0.97

Correlation Coefficient

Victory Select  Vanguard International

Almost no diversification

The 3 months correlation between Victory and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Victory Select Fund and Vanguard International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and Victory Select 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 Select Fund are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Victory Select i.e., Victory Select and Vanguard International go up and down completely randomly.

Pair Corralation between Victory Select and Vanguard International

Assuming the 90 days horizon Victory Select Fund is expected to under-perform the Vanguard International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Victory Select Fund is 1.03 times less risky than Vanguard International. The mutual fund trades about -0.34 of its potential returns per unit of risk. The Vanguard International High is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  3,375  in Vanguard International High on October 11, 2024 and sell it today you would lose (69.00) from holding Vanguard International High or give up 2.04% of portfolio value over 90 days.

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

Victory Select Fund  vs.  Vanguard International High

Victory Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Select Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Victory Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard International High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard International 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 Select and Vanguard International

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

The idea behind Victory Select Fund and Vanguard International High 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.