Correlation Between Victory Portfolios and Victory Tax

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

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

Diversification Opportunities for Victory Portfolios and Victory Tax

-0.66

Correlation Coefficient

Victory Portfolios  Victory Tax

Excellent diversification

The 3 months correlation between Victory and Victory is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Victory Portfolios and Victory Tax Exempt Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Tax Exempt and Victory Portfolios 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 Portfolios are associated (or correlated) with Victory Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Tax Exempt has no effect on the direction of Victory Portfolios i.e., Victory Portfolios and Victory Tax go up and down completely randomly.

Pair Corralation between Victory Portfolios and Victory Tax

Assuming the 90 days horizon Victory Portfolios is expected to generate 1.54 times more return on investment than Victory Tax. However, Victory Portfolios is 1.54 times more volatile than Victory Tax Exempt Fund. It trades about 0.15 of its potential returns per unit of risk. Victory Tax Exempt Fund is currently generating about -0.1 per unit of risk. If you would invest  1,845  in Victory Portfolios on May 5, 2025 and sell it today you would earn a total of  68.00  from holding Victory Portfolios or generate 3.69% return on investment over 90 days.

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

Victory Portfolios   vs.  Victory Tax Exempt Fund

Victory Portfolios

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Portfolios are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Victory Portfolios is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Victory Portfolios and Victory Tax

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

The idea behind Victory Portfolios and Victory Tax Exempt 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.