Correlation Between Vanguard High and Victory Tax

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

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

Diversification Opportunities for Vanguard High and Victory Tax

0.89

Correlation Coefficient

Vanguard High  Victory Tax

Very poor diversification

The 3 months correlation between Vanguard and Victory is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Victory Tax Exempt Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Tax Exempt and Vanguard High 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 High Yield Tax Exempt are associated (or correlated) with Victory Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Tax Exempt has no effect on the direction of Vanguard High i.e., Vanguard High and Victory Tax go up and down completely randomly.

Pair Corralation between Vanguard High and Victory Tax

Assuming the 90 days horizon Vanguard High Yield Tax Exempt is expected to generate 0.84 times more return on investment than Victory Tax. However, Vanguard High Yield Tax Exempt is 1.2 times less risky than Victory Tax. It trades about 0.05 of its potential returns per unit of risk. Victory Tax Exempt Fund is currently generating about 0.03 per unit of risk. If you would invest  1,078  in Vanguard High Yield Tax Exempt on September 13, 2024 and sell it today you would earn a total of  10.00  from holding Vanguard High Yield Tax Exempt or generate 0.93% return on investment over 90 days.

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

Vanguard High Yield Tax Exempt  vs.  Victory Tax Exempt Fund

Vanguard High Yield

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard High Yield Tax Exempt are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Vanguard High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Tax Exempt

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Tax Exempt Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Victory Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard High and Victory Tax

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

The idea behind Vanguard High Yield Tax Exempt and Victory Tax Exempt Fund 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 CEOs Directory module to screen CEOs from public companies around the world.