Correlation Between Voya Asia and Voya Infrastructure

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

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

Diversification Opportunities for Voya Asia and Voya Infrastructure

0.61

Correlation Coefficient

Voya Asia  Voya Infrastructure

Poor diversification

The 3 months correlation between Voya and Voya is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Voya Asia Pacific and Voya Infrastructure Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Infrastructure and Voya Asia 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 Voya Asia Pacific are associated (or correlated) with Voya Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Infrastructure has no effect on the direction of Voya Asia i.e., Voya Asia and Voya Infrastructure go up and down completely randomly.

Pair Corralation between Voya Asia and Voya Infrastructure

Considering the 90-day investment horizon Voya Asia is expected to generate 2.73 times less return on investment than Voya Infrastructure. In addition to that, Voya Asia is 1.34 times more volatile than Voya Infrastructure Industrials. It trades about 0.04 of its total potential returns per unit of risk. Voya Infrastructure Industrials is currently generating about 0.14 per unit of volatility. If you would invest  1,031  in Voya Infrastructure Industrials on December 4, 2024 and sell it today you would earn a total of  15.00  from holding Voya Infrastructure Industrials or generate 1.45% return on investment over 90 days.

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

Voya Asia Pacific  vs.  Voya Infrastructure Industrial

Voya Asia Pacific

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Asia Pacific are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Voya Asia is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Voya Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Infrastructure Industrials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Voya Infrastructure is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Voya Asia and Voya Infrastructure

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

The idea behind Voya Asia Pacific and Voya Infrastructure Industrials 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.