Correlation Between Vanguard Health and Victory Trivalent

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

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

Diversification Opportunities for Vanguard Health and Victory Trivalent

0.91

Correlation Coefficient

Vanguard Health  Victory Trivalent

Almost no diversification

The 3 months correlation between Vanguard and Victory is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Victory Trivalent Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Trivalent and Vanguard Health 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 Health Care are associated (or correlated) with Victory Trivalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Trivalent has no effect on the direction of Vanguard Health i.e., Vanguard Health and Victory Trivalent go up and down completely randomly.

Pair Corralation between Vanguard Health and Victory Trivalent

Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Victory Trivalent. In addition to that, Vanguard Health is 1.6 times more volatile than Victory Trivalent International. It trades about -0.24 of its total potential returns per unit of risk. Victory Trivalent International is currently generating about -0.18 per unit of volatility. If you would invest  1,658  in Victory Trivalent International on September 29, 2024 and sell it today you would lose (159.00) from holding Victory Trivalent International or give up 9.59% of portfolio value over 90 days.

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

Vanguard Health Care  vs.  Victory Trivalent Internationa

Vanguard Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Health Care 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 fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Victory Trivalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Trivalent International 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.

Pair Trading with Vanguard Health and Victory Trivalent

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

The idea behind Vanguard Health Care and Victory Trivalent International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.