Correlation Between Voya Global and Alerian MLP

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

By analyzing existing cross correlation between Voya Global Advantage and Alerian MLP ETF, you can compare the effects of market volatilities on Voya Global and Alerian MLP 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 Voya Global with a short position of Alerian MLP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Global and Alerian MLP.

Diversification Opportunities for Voya Global and Alerian MLP

0.8

Correlation Coefficient

Voya Global  Alerian MLP

Very poor diversification

The 3 months correlation between Voya and Alerian is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Advantage and Alerian MLP ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerian MLP ETF and Voya Global 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 Voya Global Advantage are associated (or correlated) with Alerian MLP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerian MLP ETF has no effect on the direction of Voya Global i.e., Voya Global and Alerian MLP go up and down completely randomly.

Pair Corralation between Voya Global and Alerian MLP

Considering the 90-day investment horizon Voya Global Advantage is expected to under-perform the Alerian MLP. But the etf apears to be less risky and, when comparing its historical volatility, Voya Global Advantage is 1.32 times less risky than Alerian MLP. The etf trades about 0.0 of its potential returns per unit of risk. The Alerian MLP ETF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,670  in Alerian MLP ETF on September 22, 2024 and sell it today you would earn a total of  85.00  from holding Alerian MLP ETF or generate 1.82% return on investment over 90 days.

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

Voya Global Advantage  vs.  Alerian MLP ETF

Voya Global Advantage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Global Advantage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Voya Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Alerian MLP ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alerian MLP ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Alerian MLP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Voya Global and Alerian MLP

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

The idea behind Voya Global Advantage and Alerian MLP ETF 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.