Correlation Between Ab High and Voya Securitized

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

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

Diversification Opportunities for Ab High and Voya Securitized

0.89

Correlation Coefficient

Ab High  Voya Securitized

Very poor diversification

The 3 months correlation between AGDIX and Voya is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab High Income and Voya Securitized Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Securitized Credit and Ab High 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 Ab High Income are associated (or correlated) with Voya Securitized. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Securitized Credit has no effect on the direction of Ab High i.e., Ab High and Voya Securitized go up and down completely randomly.

Pair Corralation between Ab High and Voya Securitized

Assuming the 90 days horizon Ab High Income is expected to generate 1.22 times more return on investment than Voya Securitized. However, Ab High is 1.22 times more volatile than Voya Securitized Credit. It trades about -0.24 of its potential returns per unit of risk. Voya Securitized Credit is currently generating about -0.3 per unit of risk. If you would invest  709.00  in Ab High Income on October 9, 2024 and sell it today you would lose (5.00) from holding Ab High Income or give up 0.71% of portfolio value over 90 days.

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

Ab High Income  vs.  Voya Securitized Credit

Ab High Income

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ab High Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Securitized Credit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Securitized Credit are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Voya Securitized is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab High and Voya Securitized

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

The idea behind Ab High Income and Voya Securitized Credit 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.