Correlation Between GM and Voya Vacs

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

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

Diversification Opportunities for GM and Voya Vacs

0.02

Correlation Coefficient

GM  Voya Vacs

Significant diversification

The 3 months correlation between GM and Voya is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Voya Vacs Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Vacs Series and GM 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 General Motors are associated (or correlated) with Voya Vacs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Vacs Series has no effect on the direction of GM i.e., GM and Voya Vacs go up and down completely randomly.

Pair Corralation between GM and Voya Vacs

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Voya Vacs. In addition to that, GM is 2.38 times more volatile than Voya Vacs Series. It trades about -0.08 of its total potential returns per unit of risk. Voya Vacs Series is currently generating about 0.0 per unit of volatility. If you would invest  1,054  in Voya Vacs Series on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Voya Vacs Series or generate 0.0% return on investment over 90 days.

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

General Motors  vs.  Voya Vacs Series

General Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Voya Vacs Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Vacs Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with GM and Voya Vacs

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

The idea behind General Motors and Voya Vacs Series 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.