Correlation Between Microsoft and Voya Large

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

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

Diversification Opportunities for Microsoft and Voya Large

0.76

Correlation Coefficient

Microsoft  Voya Large

Poor diversification

The 3 months correlation between Microsoft and Voya is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voya Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap and Microsoft 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 Microsoft are associated (or correlated) with Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Microsoft i.e., Microsoft and Voya Large go up and down completely randomly.

Pair Corralation between Microsoft and Voya Large

Given the investment horizon of 90 days Microsoft is expected to generate 4.49 times less return on investment than Voya Large. In addition to that, Microsoft is 1.21 times more volatile than Voya Large Cap. It trades about 0.03 of its total potential returns per unit of risk. Voya Large Cap is currently generating about 0.17 per unit of volatility. If you would invest  1,706  in Voya Large Cap on September 28, 2024 and sell it today you would earn a total of  203.00  from holding Voya Large Cap or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Microsoft  vs.  Voya Large Cap

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Voya Large Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Voya Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and Voya Large

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

The idea behind Microsoft and Voya Large Cap 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..