Correlation Between VictoryShares USAA and VictoryShares Small

Can any of the company-specific risk be diversified away by investing in both VictoryShares USAA and VictoryShares Small 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 Small 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 Small Mid, you can compare the effects of market volatilities on VictoryShares USAA and VictoryShares Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares USAA and VictoryShares Small.

Diversification Opportunities for VictoryShares USAA and VictoryShares Small

0.75

Correlation Coefficient

VictoryShares USAA  VictoryShares Small

Poor diversification

The 3 months correlation between VictoryShares and VictoryShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares USAA Core and VictoryShares Small Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Small Mid 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Small Mid has no effect on the direction of VictoryShares USAA i.e., VictoryShares USAA and VictoryShares Small go up and down completely randomly.

Pair Corralation between VictoryShares USAA and VictoryShares Small

Given the investment horizon of 90 days VictoryShares USAA is expected to generate 3.3 times less return on investment than VictoryShares Small. But when comparing it to its historical volatility, VictoryShares USAA Core is 3.6 times less risky than VictoryShares Small. It trades about 0.13 of its potential returns per unit of risk. VictoryShares Small Mid is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,770  in VictoryShares Small Mid on May 3, 2025 and sell it today you would earn a total of  580.00  from holding VictoryShares Small Mid or generate 7.46% 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 Small Mid

VictoryShares USAA Core

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares USAA Core are ranked lower than 10 (%) 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 Small Mid

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares Small Mid are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, VictoryShares Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with VictoryShares USAA and VictoryShares Small

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

The idea behind VictoryShares USAA Core and VictoryShares Small Mid 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..