Correlation Between Voya Financial and RenaissanceRe Holdings

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

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

Diversification Opportunities for Voya Financial and RenaissanceRe Holdings

-0.4

Correlation Coefficient

Voya Financial  RenaissanceRe Holdings

Very good diversification

The 3 months correlation between Voya and RenaissanceRe is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Voya Financial and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe Holdings and Voya Financial 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 Financial are associated (or correlated) with RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of Voya Financial i.e., Voya Financial and RenaissanceRe Holdings go up and down completely randomly.

Pair Corralation between Voya Financial and RenaissanceRe Holdings

Given the investment horizon of 90 days Voya Financial is expected to generate 4.2 times more return on investment than RenaissanceRe Holdings. However, Voya Financial is 4.2 times more volatile than RenaissanceRe Holdings. It trades about 0.15 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about 0.01 per unit of risk. If you would invest  6,987  in Voya Financial on September 3, 2024 and sell it today you would earn a total of  1,313  from holding Voya Financial or generate 18.79% return on investment over 90 days.

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

Voya Financial  vs.  RenaissanceRe Holdings

Voya Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Voya Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days RenaissanceRe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RenaissanceRe Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Voya Financial and RenaissanceRe Holdings

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

The idea behind Voya Financial and RenaissanceRe Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.