Correlation Between Victory Global and China Fund
Can any of the company-specific risk be diversified away by investing in both Victory Global and China Fund 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 Global and China Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Global Natural and China Fund, you can compare the effects of market volatilities on Victory Global and China Fund 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 Global with a short position of China Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Global and China Fund.
Diversification Opportunities for Victory Global and China Fund
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Victory and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Victory Global Natural and China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund and Victory Global 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 Global Natural are associated (or correlated) with China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund has no effect on the direction of Victory Global i.e., Victory Global and China Fund go up and down completely randomly.
Pair Corralation between Victory Global and China Fund
Assuming the 90 days horizon Victory Global Natural is expected to generate 0.69 times more return on investment than China Fund. However, Victory Global Natural is 1.45 times less risky than China Fund. It trades about 0.08 of its potential returns per unit of risk. China Fund is currently generating about 0.04 per unit of risk. If you would invest 2,402 in Victory Global Natural on August 24, 2024 and sell it today you would earn a total of 612.00 from holding Victory Global Natural or generate 25.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Global Natural vs. China Fund
Performance |
| Timeline |
| Victory Global Natural |
| China Fund |
Victory Global and China Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Global and China Fund
The main advantage of trading using opposite Victory Global and China Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Global position performs unexpectedly, China Fund 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 China Fund will offset losses from the drop in China Fund's long position.| Victory Global vs. Vanguard Materials Index | Victory Global vs. T Rowe Price | Victory Global vs. Gmo Trust | Victory Global vs. Gmo Resources |
| China Fund vs. Ashmore Group Plc | China Fund vs. Mexico Equity And | China Fund vs. Western Asset Managed | China Fund vs. Blackrock Muniholdings Quality |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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