Correlation Between Voya Short and Voya Bond

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

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

Diversification Opportunities for Voya Short and Voya Bond

0.75

Correlation Coefficient

Voya Short  Voya Bond

Poor diversification

The 3 months correlation between Voya and Voya is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Voya Short Term 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 Voya Short 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 Short Term 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 Voya Short i.e., Voya Short and Voya Bond go up and down completely randomly.

Pair Corralation between Voya Short and Voya Bond

Assuming the 90 days horizon Voya Short Term is expected to generate 0.44 times more return on investment than Voya Bond. However, Voya Short Term is 2.27 times less risky than Voya Bond. It trades about 0.0 of its potential returns per unit of risk. Voya Bond Index is currently generating about -0.16 per unit of risk. If you would invest  934.00  in Voya Short Term on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Voya Short Term or generate 0.0% return on investment over 90 days.

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

Voya Short Term  vs.  Voya Bond Index

Voya Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Short Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Short 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 fundamental drivers, 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 Voya Short and Voya Bond

The main advantage of trading using opposite Voya Short and Voya Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Short 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 Voya Short Term 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.