Correlation Between Vanguard Tax-managed and Victory Integrity

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

By analyzing existing cross correlation between Vanguard Tax Managed Small Cap and Victory Integrity Discovery, you can compare the effects of market volatilities on Vanguard Tax-managed and Victory Integrity 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 Tax-managed with a short position of Victory Integrity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Tax-managed and Victory Integrity.

Diversification Opportunities for Vanguard Tax-managed and Victory Integrity

0.93

Correlation Coefficient

Vanguard Tax-managed  Victory Integrity

Almost no diversification

The 3 months correlation between Vanguard and Victory is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Tax Managed Small Cap and Victory Integrity Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity and Vanguard Tax-managed 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 Tax Managed Small Cap are associated (or correlated) with Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity has no effect on the direction of Vanguard Tax-managed i.e., Vanguard Tax-managed and Victory Integrity go up and down completely randomly.

Pair Corralation between Vanguard Tax-managed and Victory Integrity

Assuming the 90 days horizon Vanguard Tax Managed Small Cap is expected to generate 0.7 times more return on investment than Victory Integrity. However, Vanguard Tax Managed Small Cap is 1.44 times less risky than Victory Integrity. It trades about -0.17 of its potential returns per unit of risk. Victory Integrity Discovery is currently generating about -0.17 per unit of risk. If you would invest  10,248  in Vanguard Tax Managed Small Cap on November 29, 2024 and sell it today you would lose (1,048) from holding Vanguard Tax Managed Small Cap or give up 10.23% of portfolio value over 90 days.

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

Vanguard Tax Managed Small Cap  vs.  Victory Integrity Discovery

Vanguard Tax Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Tax Managed Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Victory Integrity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Integrity Discovery 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 basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Vanguard Tax-managed and Victory Integrity

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

The idea behind Vanguard Tax Managed Small Cap and Victory Integrity Discovery 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 CEOs Directory module to screen CEOs from public companies around the world.