Correlation Between World Energy and Voya Retirement

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

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

Diversification Opportunities for World Energy and Voya Retirement

0.67

Correlation Coefficient

World Energy  Voya Retirement

Poor diversification

The 3 months correlation between World and Voya is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Voya Retirement Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Retirement Moderate and World Energy 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 World Energy Fund are associated (or correlated) with Voya Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Retirement Moderate has no effect on the direction of World Energy i.e., World Energy and Voya Retirement go up and down completely randomly.

Pair Corralation between World Energy and Voya Retirement

Assuming the 90 days horizon World Energy Fund is expected to generate 2.41 times more return on investment than Voya Retirement. However, World Energy is 2.41 times more volatile than Voya Retirement Moderate. It trades about 0.06 of its potential returns per unit of risk. Voya Retirement Moderate is currently generating about 0.02 per unit of risk. If you would invest  1,433  in World Energy Fund on October 7, 2024 and sell it today you would earn a total of  65.00  from holding World Energy Fund or generate 4.54% return on investment over 90 days.

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

World Energy Fund  vs.  Voya Retirement Moderate

World Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in World Energy Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, World Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Retirement Moderate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Retirement Moderate are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Voya Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with World Energy and Voya Retirement

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

The idea behind World Energy Fund and Voya Retirement Moderate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.