Correlation Between Federated Hermes and Voya Solution

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

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

Diversification Opportunities for Federated Hermes and Voya Solution

0.41

Correlation Coefficient

Federated Hermes  Voya Solution

Very weak diversification

The 3 months correlation between Federated and Voya is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and Voya Solution Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Conser and Federated Hermes 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 Federated Hermes Conservative 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 Conser has no effect on the direction of Federated Hermes i.e., Federated Hermes and Voya Solution go up and down completely randomly.

Pair Corralation between Federated Hermes and Voya Solution

Assuming the 90 days horizon Federated Hermes is expected to generate 1.11 times less return on investment than Voya Solution. But when comparing it to its historical volatility, Federated Hermes Conservative is 2.72 times less risky than Voya Solution. It trades about 0.23 of its potential returns per unit of risk. Voya Solution Conservative is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,024  in Voya Solution Conservative on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Voya Solution Conservative or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Federated Hermes Conservative  vs.  Voya Solution Conservative

Federated Hermes Con

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Conservative are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Solution Conser

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Conservative are ranked lower than 7 (%) 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 Federated Hermes and Voya Solution

The main advantage of trading using opposite Federated Hermes and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes 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 Federated Hermes Conservative and Voya Solution Conservative 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.