Correlation Between Victory Select and Vanguard Emerging

Can any of the company-specific risk be diversified away by investing in both Victory Select and Vanguard Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Victory Select and Vanguard Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Select and Vanguard Emerging.

Diversification Opportunities for Victory Select and Vanguard Emerging

0.84

Correlation Coefficient

Victory Select  Vanguard Emerging

Very poor diversification

The 3 months correlation between Victory and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Victory Select Fund and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Victory Select i.e., Victory Select and Vanguard Emerging go up and down completely randomly.

Pair Corralation between Victory Select and Vanguard Emerging

Assuming the 90 days horizon Victory Select is expected to generate 1.5 times less return on investment than Vanguard Emerging. In addition to that, Victory Select is 2.83 times more volatile than Vanguard Emerging Markets. It trades about 0.04 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.16 per unit of volatility. If you would invest  1,542  in Vanguard Emerging Markets on August 2, 2024 and sell it today you would earn a total of  91.00  from holding Vanguard Emerging Markets or generate 5.9% return on investment over 90 days.

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

Victory Select Fund  vs.  Vanguard Emerging Markets

Victory Select

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Select Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Emerging Markets

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Emerging 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 Emerging

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

The idea behind Victory Select Fund and Vanguard Emerging Markets 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.