Correlation Between Victory Sp and Dfa International

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Can any of the company-specific risk be diversified away by investing in both Victory Sp and Dfa International 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 Sp and Dfa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Sp 500 and Dfa International Small, you can compare the effects of market volatilities on Victory Sp and Dfa International 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 Sp with a short position of Dfa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Sp and Dfa International.

Diversification Opportunities for Victory Sp and Dfa International

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Victory and Dfa is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding VICTORY SP 500 and DFA INTERNATIONAL SMALL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Small and Victory Sp 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 Sp 500 are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International Small has no effect on the direction of Victory Sp i.e., Victory Sp and Dfa International go up and down completely randomly.

Pair Corralation between Victory Sp and Dfa International

Assuming the 90 days horizon Victory Sp 500 is expected to generate 0.93 times more return on investment than Dfa International. However, Victory Sp 500 is 1.07 times less risky than Dfa International. It trades about 0.11 of its potential returns per unit of risk. Dfa International Small is currently generating about 0.06 per unit of risk. If you would invest  2,065  in Victory Sp 500 on December 29, 2023 and sell it today you would earn a total of  562.00  from holding Victory Sp 500 or generate 27.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

VICTORY SP 500  vs.  DFA INTERNATIONAL SMALL

 Performance 
       Timeline  
Victory Sp 500 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Victory Sp 500 are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Victory Sp may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Dfa International Small 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Sp and Dfa International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Victory Sp and Dfa International

The main advantage of trading using opposite Victory Sp and Dfa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Sp position performs unexpectedly, Dfa International 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 Dfa International will offset losses from the drop in Dfa International's long position.
The idea behind Victory Sp 500 and Dfa International Small 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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