Correlation Between Omni Small and Voya Solution

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

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

Diversification Opportunities for Omni Small and Voya Solution

0.55

Correlation Coefficient

Omni Small  Voya Solution

Very weak diversification

The 3 months correlation between Omni and Voya is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Voya Solution Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Aggressive and Omni Small 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 Omni Small Cap Value are associated (or correlated) with Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution Aggressive has no effect on the direction of Omni Small i.e., Omni Small and Voya Solution go up and down completely randomly.

Pair Corralation between Omni Small and Voya Solution

Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the Voya Solution. In addition to that, Omni Small is 2.54 times more volatile than Voya Solution Aggressive. It trades about -0.41 of its total potential returns per unit of risk. Voya Solution Aggressive is currently generating about -0.06 per unit of volatility. If you would invest  1,486  in Voya Solution Aggressive on September 26, 2024 and sell it today you would lose (15.00) from holding Voya Solution Aggressive or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Omni Small Cap Value  vs.  Voya Solution Aggressive

Omni Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omni Small Cap Value 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.

Voya Solution Aggressive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Aggressive are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Omni Small and Voya Solution

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

The idea behind Omni Small Cap Value and Voya Solution Aggressive 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.