Correlation Between Income Fund and Victory Integrity

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

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

Diversification Opportunities for Income Fund and Victory Integrity

-0.61

Correlation Coefficient

Income Fund  Victory Integrity

Excellent diversification

The 3 months correlation between Income and Victory is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Income and Victory Integrity Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity and Income Fund 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 Income Fund Income 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 Income Fund i.e., Income Fund and Victory Integrity go up and down completely randomly.

Pair Corralation between Income Fund and Victory Integrity

Assuming the 90 days horizon Income Fund Income is expected to under-perform the Victory Integrity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Income Fund Income is 5.46 times less risky than Victory Integrity. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Victory Integrity Discovery is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,634  in Victory Integrity Discovery on August 30, 2024 and sell it today you would earn a total of  209.00  from holding Victory Integrity Discovery or generate 7.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Income Fund Income  vs.  Victory Integrity Discovery

Income Fund Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Victory Integrity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Integrity Discovery are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Victory Integrity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Income Fund and Victory Integrity

The main advantage of trading using opposite Income Fund and Victory Integrity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund 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 Income Fund Income 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.