Correlation Between Forum Real and Voya Real

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

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

Diversification Opportunities for Forum Real and Voya Real

-0.57

Correlation Coefficient

Forum Real  Voya Real

Excellent diversification

The 3 months correlation between Forum and Voya is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Forum Real Estate and Voya Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Real Estate and Forum Real 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 Forum Real Estate are associated (or correlated) with Voya Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Real Estate has no effect on the direction of Forum Real i.e., Forum Real and Voya Real go up and down completely randomly.

Pair Corralation between Forum Real and Voya Real

Assuming the 90 days horizon Forum Real is expected to generate 1.74 times less return on investment than Voya Real. But when comparing it to its historical volatility, Forum Real Estate is 8.46 times less risky than Voya Real. It trades about 0.35 of its potential returns per unit of risk. Voya Real Estate is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  858.00  in Voya Real Estate on October 8, 2024 and sell it today you would earn a total of  193.00  from holding Voya Real Estate or generate 22.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Forum Real Estate  vs.  Voya Real Estate

Forum Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Real Estate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Forum Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Forum Real and Voya Real

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

The idea behind Forum Real Estate and Voya Real Estate 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.