Correlation Between Western Asset and Voya Global

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

By analyzing existing cross correlation between Western Asset Global and Voya Global Advantage, you can compare the effects of market volatilities on Western Asset and Voya Global 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 Western Asset with a short position of Voya Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Voya Global.

Diversification Opportunities for Western Asset and Voya Global

0.75

Correlation Coefficient

Western Asset  Voya Global

Poor diversification

The 3 months correlation between Western and Voya is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Voya Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Global Advantage and Western Asset 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 Western Asset Global are associated (or correlated) with Voya Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Global Advantage has no effect on the direction of Western Asset i.e., Western Asset and Voya Global go up and down completely randomly.

Pair Corralation between Western Asset and Voya Global

Considering the 90-day investment horizon Western Asset is expected to generate 1.95 times less return on investment than Voya Global. But when comparing it to its historical volatility, Western Asset Global is 1.14 times less risky than Voya Global. It trades about 0.12 of its potential returns per unit of risk. Voya Global Advantage is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  900.00  in Voya Global Advantage on December 28, 2024 and sell it today you would earn a total of  73.00  from holding Voya Global Advantage or generate 8.11% return on investment over 90 days.

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

Western Asset Global  vs.  Voya Global Advantage

Western Asset Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Global are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical indicators, Western Asset is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Voya Global Advantage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Advantage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, Voya Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Western Asset and Voya Global

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

The idea behind Western Asset Global and Voya Global Advantage 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.