Correlation Between VictoryShares Multi and Vanguard Value

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

By analyzing existing cross correlation between VictoryShares Multi Factor Minimum and Vanguard Value Index, you can compare the effects of market volatilities on VictoryShares Multi and Vanguard Value 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 VictoryShares Multi with a short position of Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares Multi and Vanguard Value.

Diversification Opportunities for VictoryShares Multi and Vanguard Value

0.9

Correlation Coefficient

VictoryShares Multi  Vanguard Value

Almost no diversification

The 3 months correlation between VictoryShares and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares Multi Factor Min and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index and VictoryShares Multi 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 VictoryShares Multi Factor Minimum are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of VictoryShares Multi i.e., VictoryShares Multi and Vanguard Value go up and down completely randomly.

Pair Corralation between VictoryShares Multi and Vanguard Value

Given the investment horizon of 90 days VictoryShares Multi Factor Minimum is expected to under-perform the Vanguard Value. But the etf apears to be less risky and, when comparing its historical volatility, VictoryShares Multi Factor Minimum is 1.29 times less risky than Vanguard Value. The etf trades about -0.05 of its potential returns per unit of risk. The Vanguard Value Index is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  17,869  in Vanguard Value Index on December 3, 2024 and sell it today you would lose (267.00) from holding Vanguard Value Index or give up 1.49% of portfolio value over 90 days.

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

VictoryShares Multi Factor Min  vs.  Vanguard Value Index

VictoryShares Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares Multi Factor Minimum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VictoryShares Multi is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vanguard Value Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Value Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with VictoryShares Multi and Vanguard Value

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

The idea behind VictoryShares Multi Factor Minimum and Vanguard Value Index 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.