Correlation Between Champlain Mid and Voya Solution

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

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

Diversification Opportunities for Champlain Mid and Voya Solution

0.73

Correlation Coefficient

Champlain Mid  Voya Solution

Poor diversification

The 3 months correlation between Champlain and Voya is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap 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 Champlain Mid 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 Champlain Mid Cap 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 Champlain Mid i.e., Champlain Mid and Voya Solution go up and down completely randomly.

Pair Corralation between Champlain Mid and Voya Solution

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Voya Solution. In addition to that, Champlain Mid is 1.14 times more volatile than Voya Solution Aggressive. It trades about -0.09 of its total potential returns per unit of risk. Voya Solution Aggressive is currently generating about -0.04 per unit of volatility. If you would invest  1,517  in Voya Solution Aggressive on December 22, 2024 and sell it today you would lose (32.00) from holding Voya Solution Aggressive or give up 2.11% of portfolio value over 90 days.

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

Champlain Mid Cap  vs.  Voya Solution Aggressive

Champlain Mid Cap

Risk-Adjusted Performance

Very Weak

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

Voya Solution Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Solution Aggressive has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary 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 Champlain Mid and Voya Solution

The main advantage of trading using opposite Champlain Mid and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Mid 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 Champlain Mid Cap 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.