Correlation Between Victory Special and Victory Integrity

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

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

Diversification Opportunities for Victory Special and Victory Integrity

0.92

Correlation Coefficient

Victory Special  Victory Integrity

Almost no diversification

The 3 months correlation between Victory and Victory is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Victory Special Value and Victory Integrity Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity Mid and Victory Special 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 Special Value 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 Mid has no effect on the direction of Victory Special i.e., Victory Special and Victory Integrity go up and down completely randomly.

Pair Corralation between Victory Special and Victory Integrity

Assuming the 90 days horizon Victory Special Value is expected to generate 0.42 times more return on investment than Victory Integrity. However, Victory Special Value is 2.36 times less risky than Victory Integrity. It trades about 0.16 of its potential returns per unit of risk. Victory Integrity Mid Cap is currently generating about -0.08 per unit of risk. If you would invest  3,437  in Victory Special Value on September 17, 2024 and sell it today you would earn a total of  288.00  from holding Victory Special Value or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Victory Special Value  vs.  Victory Integrity Mid Cap

Victory Special Value

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Special Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Victory Special may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Victory Integrity Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Integrity Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary 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 Victory Special and Victory Integrity

The main advantage of trading using opposite Victory Special and Victory Integrity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Special 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 Victory Special Value and Victory Integrity Mid Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.