Correlation Between Lifestyle and Voya Solution

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

By analyzing existing cross correlation between Lifestyle Ii Moderate and Voya Solution Moderately, you can compare the effects of market volatilities on Lifestyle and Voya Solution 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 Lifestyle with a short position of Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Voya Solution.

Diversification Opportunities for Lifestyle and Voya Solution

0.68

Correlation Coefficient

Lifestyle  Voya Solution

Poor diversification

The 3 months correlation between Lifestyle and Voya is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Voya Solution Moderately in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Moderately and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution Moderately has no effect on the direction of Lifestyle i.e., Lifestyle and Voya Solution go up and down completely randomly.

Pair Corralation between Lifestyle and Voya Solution

Assuming the 90 days horizon Lifestyle is expected to generate 3.45 times less return on investment than Voya Solution. But when comparing it to its historical volatility, Lifestyle Ii Moderate is 1.63 times less risky than Voya Solution. It trades about 0.07 of its potential returns per unit of risk. Voya Solution Moderately is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,209  in Voya Solution Moderately on August 30, 2024 and sell it today you would earn a total of  62.00  from holding Voya Solution Moderately or generate 5.13% return on investment over 90 days.

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

Lifestyle Ii Moderate  vs.  Voya Solution Moderately

Lifestyle Ii Moderate

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifestyle Ii Moderate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Solution Moderately

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Moderately are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lifestyle and Voya Solution

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

The idea behind Lifestyle Ii Moderate and Voya Solution Moderately 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.