Correlation Between Victory Tax and Intermediate Term

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

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

Diversification Opportunities for Victory Tax and Intermediate Term

-0.33

Correlation Coefficient

Victory Tax  Intermediate Term

Very good diversification

The 3 months correlation between Victory and Intermediate is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Victory Tax Exempt Fund and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Bond and Victory Tax 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 Tax Exempt Fund are associated (or correlated) with Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of Victory Tax i.e., Victory Tax and Intermediate Term go up and down completely randomly.

Pair Corralation between Victory Tax and Intermediate Term

Assuming the 90 days horizon Victory Tax Exempt Fund is expected to under-perform the Intermediate Term. But the mutual fund apears to be less risky and, when comparing its historical volatility, Victory Tax Exempt Fund is 1.2 times less risky than Intermediate Term. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Intermediate Term Bond Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  904.00  in Intermediate Term Bond Fund on May 4, 2025 and sell it today you would earn a total of  13.00  from holding Intermediate Term Bond Fund or generate 1.44% return on investment over 90 days.

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

Victory Tax Exempt Fund  vs.  Intermediate Term Bond Fund

Victory Tax Exempt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Tax Exempt Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and 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.

Intermediate Term Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Term Bond Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Intermediate Term 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 Tax and Intermediate Term

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

The idea behind Victory Tax Exempt Fund and Intermediate Term Bond 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.