Correlation Between Victory Diversified and Extended Market
Can any of the company-specific risk be diversified away by investing in both Victory Diversified and Extended Market 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 Diversified and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Diversified Stock and Extended Market Index, you can compare the effects of market volatilities on Victory Diversified and Extended Market 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 Diversified with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Diversified and Extended Market.
Diversification Opportunities for Victory Diversified and Extended Market
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Victory and Extended is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Victory Diversified Stock and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Victory Diversified 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 Diversified Stock are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Victory Diversified i.e., Victory Diversified and Extended Market go up and down completely randomly.
Pair Corralation between Victory Diversified and Extended Market
Assuming the 90 days horizon Victory Diversified is expected to generate 2.89 times less return on investment than Extended Market. But when comparing it to its historical volatility, Victory Diversified Stock is 1.26 times less risky than Extended Market. It trades about 0.12 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,325 in Extended Market Index on August 30, 2024 and sell it today you would earn a total of 188.00 from holding Extended Market Index or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory Diversified Stock vs. Extended Market Index
Performance |
| Timeline |
| Victory Diversified Stock |
| Extended Market Index |
Victory Diversified and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Diversified and Extended Market
The main advantage of trading using opposite Victory Diversified and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Diversified position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Victory Diversified vs. Income Fund Income | Victory Diversified vs. Usaa Nasdaq 100 | Victory Diversified vs. Intermediate Term Bond Fund | Victory Diversified vs. Usaa Intermediate Term |
| Extended Market vs. Legg Mason Partners | Extended Market vs. Dodge Cox Emerging | Extended Market vs. Barings Emerging Markets | Extended Market vs. Black Oak Emerging |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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