Correlation Between Energy Basic and Voya Stock
Can any of the company-specific risk be diversified away by investing in both Energy Basic and Voya Stock 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 Energy Basic and Voya Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Voya Stock Index, you can compare the effects of market volatilities on Energy Basic and Voya Stock 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 Energy Basic with a short position of Voya Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Voya Stock.
Diversification Opportunities for Energy Basic and Voya Stock
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Voya is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Voya Stock Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Stock Index and Energy Basic 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 Energy Basic Materials are associated (or correlated) with Voya Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Stock Index has no effect on the direction of Energy Basic i.e., Energy Basic and Voya Stock go up and down completely randomly.
Pair Corralation between Energy Basic and Voya Stock
Assuming the 90 days horizon Energy Basic Materials is expected to under-perform the Voya Stock. In addition to that, Energy Basic is 1.04 times more volatile than Voya Stock Index. It trades about -0.63 of its total potential returns per unit of risk. Voya Stock Index is currently generating about 0.0 per unit of volatility. If you would invest 2,084 in Voya Stock Index on September 24, 2024 and sell it today you would lose (3.00) from holding Voya Stock Index or give up 0.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Energy Basic Materials vs. Voya Stock Index
Performance |
Timeline |
Energy Basic Materials |
Voya Stock Index |
Energy Basic and Voya Stock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energy Basic and Voya Stock
The main advantage of trading using opposite Energy Basic and Voya Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic position performs unexpectedly, Voya Stock 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 Stock will offset losses from the drop in Voya Stock's long position.Energy Basic vs. Investec Global Franchise | Energy Basic vs. Ab Global Real | Energy Basic vs. Franklin Mutual Global | Energy Basic vs. Legg Mason Global |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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