Correlation Between Voya Solution and Invesco Technology

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

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

Diversification Opportunities for Voya Solution and Invesco Technology

0.72

Correlation Coefficient

Voya Solution  Invesco Technology

Poor diversification

The 3 months correlation between Voya and Invesco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution Moderately and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Voya Solution 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 Solution Moderately are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Voya Solution i.e., Voya Solution and Invesco Technology go up and down completely randomly.

Pair Corralation between Voya Solution and Invesco Technology

Assuming the 90 days horizon Voya Solution Moderately is expected to generate 0.34 times more return on investment than Invesco Technology. However, Voya Solution Moderately is 2.94 times less risky than Invesco Technology. It trades about 0.06 of its potential returns per unit of risk. Invesco Technology Fund is currently generating about 0.02 per unit of risk. If you would invest  1,232  in Voya Solution Moderately on October 24, 2024 and sell it today you would earn a total of  26.00  from holding Voya Solution Moderately or generate 2.11% return on investment over 90 days.

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

Voya Solution Moderately  vs.  Invesco Technology Fund

Voya Solution Moderately

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Moderately are ranked lower than 4 (%) 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.

Invesco Technology

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Technology Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Voya Solution and Invesco Technology

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

The idea behind Voya Solution Moderately and Invesco Technology Fund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.