Correlation Between Voya Bond and Voya Short

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

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

Diversification Opportunities for Voya Bond and Voya Short

0.7

Correlation Coefficient

Voya Bond  Voya Short

Poor diversification

The 3 months correlation between Voya and Voya is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Voya Bond Index and Voya Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Short Term and Voya Bond 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 Bond Index are associated (or correlated) with Voya Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Short Term has no effect on the direction of Voya Bond i.e., Voya Bond and Voya Short go up and down completely randomly.

Pair Corralation between Voya Bond and Voya Short

Assuming the 90 days horizon Voya Bond is expected to generate 2.81 times less return on investment than Voya Short. In addition to that, Voya Bond is 2.03 times more volatile than Voya Short Term. It trades about 0.04 of its total potential returns per unit of risk. Voya Short Term is currently generating about 0.22 per unit of volatility. If you would invest  928.00  in Voya Short Term on September 17, 2024 and sell it today you would earn a total of  6.00  from holding Voya Short Term or generate 0.65% return on investment over 90 days.

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

Voya Bond Index  vs.  Voya Short Term

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.

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.

Pair Trading with Voya Bond and Voya Short

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

The idea behind Voya Bond Index and Voya Short Term 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.