Correlation Between Victory Incore and Wasatch Micro

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

By analyzing existing cross correlation between Victory Incore Investment and Wasatch Micro Cap, you can compare the effects of market volatilities on Victory Incore and Wasatch Micro 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 Incore with a short position of Wasatch Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Incore and Wasatch Micro.

Diversification Opportunities for Victory Incore and Wasatch Micro

0.21

Correlation Coefficient

Victory Incore  Wasatch Micro

Modest diversification

The 3 months correlation between Victory and Wasatch is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Victory Incore Investment and Wasatch Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Micro Cap and Victory Incore 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 Incore Investment are associated (or correlated) with Wasatch Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Micro Cap has no effect on the direction of Victory Incore i.e., Victory Incore and Wasatch Micro go up and down completely randomly.

Pair Corralation between Victory Incore and Wasatch Micro

Assuming the 90 days horizon Victory Incore Investment is expected to generate 0.34 times more return on investment than Wasatch Micro. However, Victory Incore Investment is 2.94 times less risky than Wasatch Micro. It trades about -0.1 of its potential returns per unit of risk. Wasatch Micro Cap is currently generating about -0.24 per unit of risk. If you would invest  1,810  in Victory Incore Investment on December 20, 2024 and sell it today you would lose (47.00) from holding Victory Incore Investment or give up 2.6% of portfolio value over 90 days.

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

Victory Incore Investment  vs.  Wasatch Micro Cap

Victory Incore Investment

Risk-Adjusted Performance

Very Weak

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

Wasatch Micro Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wasatch Micro 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 fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Victory Incore and Wasatch Micro

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

The idea behind Victory Incore Investment and Wasatch Micro 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.