Correlation Between Schwab Treasury and Voya Midcap

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

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

Diversification Opportunities for Schwab Treasury and Voya Midcap

-0.6

Correlation Coefficient

Schwab Treasury  Voya Midcap

Excellent diversification

The 3 months correlation between Schwab and Voya is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Inflation and Voya Midcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Midcap Opportunities and Schwab Treasury 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 Schwab Treasury Inflation are associated (or correlated) with Voya Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Midcap Opportunities has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Voya Midcap go up and down completely randomly.

Pair Corralation between Schwab Treasury and Voya Midcap

Assuming the 90 days horizon Schwab Treasury Inflation is expected to under-perform the Voya Midcap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Schwab Treasury Inflation is 4.1 times less risky than Voya Midcap. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Voya Midcap Opportunities is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Voya Midcap Opportunities on September 15, 2024 and sell it today you would earn a total of  55.00  from holding Voya Midcap Opportunities or generate 16.37% return on investment over 90 days.

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

Schwab Treasury Inflation  vs.  Voya Midcap Opportunities

Schwab Treasury Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Treasury Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Schwab Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Midcap Opportunities

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 18 (%) 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.

Pair Trading with Schwab Treasury and Voya Midcap

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

The idea behind Schwab Treasury Inflation and Voya Midcap Opportunities 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 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.