Correlation Between Voya Midcap and Cutler Equity

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

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

Diversification Opportunities for Voya Midcap and Cutler Equity

0.31

Correlation Coefficient

Voya Midcap  Cutler Equity

Weak diversification

The 3 months correlation between Voya and Cutler is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity and Voya Midcap 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 Midcap Opportunities are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of Voya Midcap i.e., Voya Midcap and Cutler Equity go up and down completely randomly.

Pair Corralation between Voya Midcap and Cutler Equity

Assuming the 90 days horizon Voya Midcap Opportunities is expected to generate 1.32 times more return on investment than Cutler Equity. However, Voya Midcap is 1.32 times more volatile than Cutler Equity. It trades about 0.14 of its potential returns per unit of risk. Cutler Equity is currently generating about -0.12 per unit of risk. If you would invest  545.00  in Voya Midcap Opportunities on September 22, 2024 and sell it today you would earn a total of  60.00  from holding Voya Midcap Opportunities or generate 11.01% return on investment over 90 days.

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

Voya Midcap Opportunities  vs.  Cutler Equity

Voya Midcap Opportunities

Risk-Adjusted Performance

11 of 100

Good

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

Cutler Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cutler Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Voya Midcap and Cutler Equity

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

The idea behind Voya Midcap Opportunities and Cutler Equity 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.