Correlation Between Vanguard Global and Victory Select

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

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

Diversification Opportunities for Vanguard Global and Victory Select

0.94

Correlation Coefficient

Vanguard Global  Victory Select

Almost no diversification

The 3 months correlation between Vanguard and Victory is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Ex Us and Victory Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Select and Vanguard Global 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 Vanguard Global Ex Us are associated (or correlated) with Victory Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Select has no effect on the direction of Vanguard Global i.e., Vanguard Global and Victory Select go up and down completely randomly.

Pair Corralation between Vanguard Global and Victory Select

Assuming the 90 days horizon Vanguard Global Ex Us is expected to generate 0.79 times more return on investment than Victory Select. However, Vanguard Global Ex Us is 1.27 times less risky than Victory Select. It trades about 0.08 of its potential returns per unit of risk. Victory Select Fund is currently generating about 0.05 per unit of risk. If you would invest  2,398  in Vanguard Global Ex Us on December 30, 2024 and sell it today you would earn a total of  73.00  from holding Vanguard Global Ex Us or generate 3.04% return on investment over 90 days.

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

Vanguard Global Ex Us  vs.  Victory Select Fund

Vanguard Global Ex

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Ex Us are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Vanguard Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Select

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Select Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Vanguard Global and Victory Select

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

The idea behind Vanguard Global Ex Us and Victory Select Fund 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.