Correlation Between Vanguard Developed and Victory Select

Can any of the company-specific risk be diversified away by investing in both Vanguard Developed 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 Developed 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 Developed Markets and Victory Select Fund, you can compare the effects of market volatilities on Vanguard Developed 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 Developed with a short position of Victory Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and Victory Select.

Diversification Opportunities for Vanguard Developed and Victory Select

0.8

Correlation Coefficient

Vanguard Developed  Victory Select

Very poor diversification

The 3 months correlation between Vanguard and Victory is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets 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 Developed 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 Developed Markets 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 Developed i.e., Vanguard Developed and Victory Select go up and down completely randomly.

Pair Corralation between Vanguard Developed and Victory Select

Assuming the 90 days horizon Vanguard Developed Markets is expected to generate 1.01 times more return on investment than Victory Select. However, Vanguard Developed is 1.01 times more volatile than Victory Select Fund. It trades about 0.2 of its potential returns per unit of risk. Victory Select Fund is currently generating about 0.1 per unit of risk. If you would invest  1,539  in Vanguard Developed Markets on December 21, 2024 and sell it today you would earn a total of  156.00  from holding Vanguard Developed Markets or generate 10.14% return on investment over 90 days.

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

Vanguard Developed Markets  vs.  Victory Select Fund

Vanguard Developed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Developed Markets are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vanguard Developed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Victory Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Select Fund are ranked lower than 7 (%) 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 Developed and Victory Select

The main advantage of trading using opposite Vanguard Developed and Victory Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed 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 Developed Markets 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.