Correlation Between Victory Select and Vanguard Global

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

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

Diversification Opportunities for Victory Select and Vanguard Global

0.88

Correlation Coefficient

Victory Select  Vanguard Global

Very poor diversification

The 3 months correlation between Victory and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Victory Select Fund and Vanguard Global Ex Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Ex and Victory Select 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 Select Fund are associated (or correlated) with Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Ex has no effect on the direction of Victory Select i.e., Victory Select and Vanguard Global go up and down completely randomly.

Pair Corralation between Victory Select and Vanguard Global

Assuming the 90 days horizon Victory Select Fund is expected to generate 0.84 times more return on investment than Vanguard Global. However, Victory Select Fund is 1.19 times less risky than Vanguard Global. It trades about 0.01 of its potential returns per unit of risk. Vanguard Global Ex Us is currently generating about -0.04 per unit of risk. If you would invest  2,959  in Victory Select Fund on September 1, 2024 and sell it today you would earn a total of  12.00  from holding Victory Select Fund or generate 0.41% return on investment over 90 days.

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

Victory Select Fund  vs.  Vanguard Global Ex Us

Victory Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Select Fund has generated negative risk-adjusted returns adding no value to fund investors. 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.

Vanguard Global Ex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Global Ex Us has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Vanguard Global 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 Select and Vanguard Global

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

The idea behind Victory Select Fund and Vanguard Global Ex Us 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.