Correlation Between Guidemark Large and Voya Bond

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

By analyzing existing cross correlation between Guidemark Large Cap and Voya Bond Index, you can compare the effects of market volatilities on Guidemark Large and Voya Bond 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 Guidemark Large with a short position of Voya Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Voya Bond.

Diversification Opportunities for Guidemark Large and Voya Bond

0.68

Correlation Coefficient

Guidemark Large  Voya Bond

Poor diversification

The 3 months correlation between Guidemark and Voya is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Voya Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Bond Index and Guidemark Large 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 Guidemark Large Cap are associated (or correlated) with Voya Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Bond Index has no effect on the direction of Guidemark Large i.e., Guidemark Large and Voya Bond go up and down completely randomly.

Pair Corralation between Guidemark Large and Voya Bond

Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the Voya Bond. In addition to that, Guidemark Large is 2.34 times more volatile than Voya Bond Index. It trades about -0.12 of its total potential returns per unit of risk. Voya Bond Index is currently generating about -0.2 per unit of volatility. If you would invest  927.00  in Voya Bond Index on September 27, 2024 and sell it today you would lose (37.00) from holding Voya Bond Index or give up 3.99% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  Voya Bond Index

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guidemark Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Bond Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Bond Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guidemark Large and Voya Bond

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

The idea behind Guidemark Large Cap and Voya Bond Index 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.