Correlation Between Voya Large and Voya Limited

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

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

Diversification Opportunities for Voya Large and Voya Limited

-0.23

Correlation Coefficient

Voya Large  Voya Limited

Very good diversification

The 3 months correlation between Voya and Voya is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Voya Large Cap and Voya Limited Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Limited Maturity and Voya Large 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 Large Cap are associated (or correlated) with Voya Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Limited Maturity has no effect on the direction of Voya Large i.e., Voya Large and Voya Limited go up and down completely randomly.

Pair Corralation between Voya Large and Voya Limited

Assuming the 90 days horizon Voya Large Cap is expected to generate 9.54 times more return on investment than Voya Limited. However, Voya Large is 9.54 times more volatile than Voya Limited Maturity. It trades about 0.07 of its potential returns per unit of risk. Voya Limited Maturity is currently generating about 0.14 per unit of risk. If you would invest  1,693  in Voya Large Cap on September 29, 2024 and sell it today you would earn a total of  188.00  from holding Voya Large Cap or generate 11.1% return on investment over 90 days.

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

Voya Large Cap  vs.  Voya Limited Maturity

Voya Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap are ranked lower than 11 (%) 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.

Voya Limited Maturity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Voya Large and Voya Limited

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

The idea behind Voya Large Cap and Voya Limited Maturity 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.