Correlation Between VictoryShares USAA and VictoryShares International

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

By analyzing existing cross correlation between VictoryShares USAA Core and VictoryShares International Value, you can compare the effects of market volatilities on VictoryShares USAA and VictoryShares 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 VictoryShares USAA with a short position of VictoryShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares USAA and VictoryShares International.

Diversification Opportunities for VictoryShares USAA and VictoryShares International

0.71

Correlation Coefficient

VictoryShares USAA  VictoryShares International

Poor diversification

The 3 months correlation between VictoryShares and VictoryShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares USAA Core and VictoryShares International Va in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares International and VictoryShares USAA 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 VictoryShares USAA Core are associated (or correlated) with VictoryShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares International has no effect on the direction of VictoryShares USAA i.e., VictoryShares USAA and VictoryShares International go up and down completely randomly.

Pair Corralation between VictoryShares USAA and VictoryShares International

Given the investment horizon of 90 days VictoryShares USAA is expected to generate 3.45 times less return on investment than VictoryShares International. But when comparing it to its historical volatility, VictoryShares USAA Core is 2.44 times less risky than VictoryShares International. It trades about 0.14 of its potential returns per unit of risk. VictoryShares International Value is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,349  in VictoryShares International Value on May 4, 2025 and sell it today you would earn a total of  477.00  from holding VictoryShares International Value or generate 8.92% return on investment over 90 days.

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

VictoryShares USAA Core  vs.  VictoryShares International Va

VictoryShares USAA Core

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares USAA Core are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, VictoryShares USAA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VictoryShares International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares International Value are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VictoryShares International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with VictoryShares USAA and VictoryShares International

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

The idea behind VictoryShares USAA Core and VictoryShares International Value 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.