Correlation Between Alphacentric Hedged and Voya Index

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

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

Diversification Opportunities for Alphacentric Hedged and Voya Index

0.71

Correlation Coefficient

Alphacentric Hedged  Voya Index

Poor diversification

The 3 months correlation between Alphacentric and Voya is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution and Alphacentric Hedged 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 Alphacentric Hedged Market 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 Solution has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Voya Index go up and down completely randomly.

Pair Corralation between Alphacentric Hedged and Voya Index

Assuming the 90 days horizon Alphacentric Hedged Market is expected to under-perform the Voya Index. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alphacentric Hedged Market is 1.1 times less risky than Voya Index. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Voya Index Solution is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,588  in Voya Index Solution on December 22, 2024 and sell it today you would lose (7.00) from holding Voya Index Solution or give up 0.44% of portfolio value over 90 days.

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

Alphacentric Hedged Market  vs.  Voya Index Solution

Alphacentric Hedged

Risk-Adjusted Performance

Very Weak

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

Voya Index Solution

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Index Solution has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Alphacentric Hedged and Voya Index

The main advantage of trading using opposite Alphacentric Hedged and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphacentric Hedged 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 Alphacentric Hedged Market and Voya Index Solution 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..