Correlation Between Dunham Large and Voya Index

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

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

Diversification Opportunities for Dunham Large and Voya Index

0.78

Correlation Coefficient

Dunham Large  Voya Index

Poor diversification

The 3 months correlation between Dunham and Voya is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Voya Index Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Plus and Dunham Large 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 Dunham Large Cap are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Plus has no effect on the direction of Dunham Large i.e., Dunham Large and Voya Index go up and down completely randomly.

Pair Corralation between Dunham Large and Voya Index

Assuming the 90 days horizon Dunham Large is expected to generate 1.02 times less return on investment than Voya Index. But when comparing it to its historical volatility, Dunham Large Cap is 1.68 times less risky than Voya Index. It trades about 0.11 of its potential returns per unit of risk. Voya Index Plus is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,810  in Voya Index Plus on September 26, 2024 and sell it today you would earn a total of  494.00  from holding Voya Index Plus or generate 27.29% return on investment over 90 days.

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

Dunham Large Cap  vs.  Voya Index Plus

Dunham Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Index Plus

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Index Plus 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 Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dunham Large and Voya Index

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

The idea behind Dunham Large Cap and Voya Index Plus 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.