Correlation Between Victory Strategic and Virtus Rampart

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

By analyzing existing cross correlation between Victory Strategic Allocation and Virtus Rampart Enhanced, you can compare the effects of market volatilities on Victory Strategic and Virtus Rampart 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 Strategic with a short position of Virtus Rampart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Strategic and Virtus Rampart.

Diversification Opportunities for Victory Strategic and Virtus Rampart

0.92

Correlation Coefficient

Victory Strategic  Virtus Rampart

Almost no diversification

The 3 months correlation between VICTORY and Virtus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Victory Strategic Allocation and Virtus Rampart Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Rampart Enhanced and Victory Strategic 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 Strategic Allocation are associated (or correlated) with Virtus Rampart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Rampart Enhanced has no effect on the direction of Victory Strategic i.e., Victory Strategic and Virtus Rampart go up and down completely randomly.

Pair Corralation between Victory Strategic and Virtus Rampart

Assuming the 90 days horizon Victory Strategic is expected to generate 1.26 times less return on investment than Virtus Rampart. But when comparing it to its historical volatility, Victory Strategic Allocation is 1.5 times less risky than Virtus Rampart. It trades about 0.14 of its potential returns per unit of risk. Virtus Rampart Enhanced is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,100  in Virtus Rampart Enhanced on September 2, 2024 and sell it today you would earn a total of  103.00  from holding Virtus Rampart Enhanced or generate 4.9% return on investment over 90 days.

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

Victory Strategic Allocation  vs.  Virtus Rampart Enhanced

Victory Strategic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Strategic Allocation are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Victory Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Rampart Enhanced

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Rampart Enhanced are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Virtus Rampart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Victory Strategic and Virtus Rampart

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

The idea behind Victory Strategic Allocation and Virtus Rampart Enhanced 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.