Correlation Between Voya Midcap and Value Line

Can any of the company-specific risk be diversified away by investing in both Voya Midcap and Value Line 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 Value Line 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 Value Line Larger, you can compare the effects of market volatilities on Voya Midcap and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Midcap and Value Line.

Diversification Opportunities for Voya Midcap and Value Line

0.97

Correlation Coefficient

Voya Midcap  Value Line

Almost no diversification

The 3 months correlation between Voya and Value is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Value Line Larger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Larger 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Larger has no effect on the direction of Voya Midcap i.e., Voya Midcap and Value Line go up and down completely randomly.

Pair Corralation between Voya Midcap and Value Line

Assuming the 90 days horizon Voya Midcap is expected to generate 1.02 times less return on investment than Value Line. But when comparing it to its historical volatility, Voya Midcap Opportunities is 1.24 times less risky than Value Line. It trades about 0.31 of its potential returns per unit of risk. Value Line Larger is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,254  in Value Line Larger on September 3, 2024 and sell it today you would earn a total of  687.00  from holding Value Line Larger or generate 21.11% return on investment over 90 days.

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

Voya Midcap Opportunities  vs.  Value Line Larger

Voya Midcap Opportunities

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Midcap showed solid returns over the last few months and may actually be approaching a breakup point.

Value Line Larger

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Larger are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Value Line showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Voya Midcap and Value Line

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

The idea behind Voya Midcap Opportunities and Value Line Larger 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.