Correlation Between Eagle Small and Voya Large

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

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

Diversification Opportunities for Eagle Small and Voya Large

0.91

Correlation Coefficient

Eagle Small  Voya Large

Almost no diversification

The 3 months correlation between Eagle and Voya is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap and Voya Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap and Eagle Small 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 Eagle Small Cap are associated (or correlated) with Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Eagle Small i.e., Eagle Small and Voya Large go up and down completely randomly.

Pair Corralation between Eagle Small and Voya Large

Assuming the 90 days horizon Eagle Small is expected to generate 1.39 times less return on investment than Voya Large. But when comparing it to its historical volatility, Eagle Small Cap is 1.0 times less risky than Voya Large. It trades about 0.11 of its potential returns per unit of risk. Voya Large Cap Growth is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,666  in Voya Large Cap Growth on September 16, 2024 and sell it today you would earn a total of  603.00  from holding Voya Large Cap Growth or generate 10.64% return on investment over 90 days.

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

Eagle Small Cap  vs.  Voya Large Cap Growth

Eagle Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Eagle Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Voya Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Voya Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eagle Small and Voya Large

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

The idea behind Eagle Small Cap and Voya Large Cap Growth 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.