Correlation Between Ab High and Voya Midcap

Can any of the company-specific risk be diversified away by investing in both Ab High 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 Ab High and Voya Midcap 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 Midcap Opportunities, you can compare the effects of market volatilities on Ab High 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 Ab High with a short position of Voya Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab High and Voya Midcap.

Diversification Opportunities for Ab High and Voya Midcap

-0.1

Correlation Coefficient

Ab High  Voya Midcap

Good diversification

The 3 months correlation between AGDZX and Voya is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ab High Income 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 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 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 Ab High i.e., Ab High and Voya Midcap go up and down completely randomly.

Pair Corralation between Ab High and Voya Midcap

Assuming the 90 days horizon Ab High Income is expected to generate 0.13 times more return on investment than Voya Midcap. However, Ab High Income is 7.91 times less risky than Voya Midcap. It trades about 0.12 of its potential returns per unit of risk. Voya Midcap Opportunities is currently generating about -0.09 per unit of risk. If you would invest  689.00  in Ab High Income on December 19, 2024 and sell it today you would earn a total of  10.00  from holding Ab High Income or generate 1.45% return on investment over 90 days.

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

Ab High Income  vs.  Voya Midcap Opportunities

Ab High Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ab High Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Midcap Opportunities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Midcap Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ab High and Voya Midcap

The main advantage of trading using opposite Ab High and Voya Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab High 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 Ab High Income 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.

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.