Correlation Between Voya Solution and Voya Midcap

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

By analyzing existing cross correlation between Voya Solution Aggressive and Voya Midcap Opportunities, you can compare the effects of market volatilities on Voya Solution and Voya Midcap 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 Voya Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Solution and Voya Midcap.

Diversification Opportunities for Voya Solution and Voya Midcap

0.79

Correlation Coefficient

Voya Solution  Voya Midcap

Poor diversification

The 3 months correlation between Voya and Voya is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution Aggressive and Voya Midcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Midcap Opportunities 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 Aggressive are associated (or correlated) with Voya Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Midcap Opportunities has no effect on the direction of Voya Solution i.e., Voya Solution and Voya Midcap go up and down completely randomly.

Pair Corralation between Voya Solution and Voya Midcap

Assuming the 90 days horizon Voya Solution Aggressive is expected to generate 0.22 times more return on investment than Voya Midcap. However, Voya Solution Aggressive is 4.55 times less risky than Voya Midcap. It trades about -0.22 of its potential returns per unit of risk. Voya Midcap Opportunities is currently generating about -0.25 per unit of risk. If you would invest  1,520  in Voya Solution Aggressive on September 24, 2024 and sell it today you would lose (47.00) from holding Voya Solution Aggressive or give up 3.09% of portfolio value over 90 days.

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

Voya Solution Aggressive  vs.  Voya Midcap Opportunities

Voya Solution Aggressive

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Aggressive are ranked lower than 1 (%) 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.

Voya Midcap Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Midcap Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Midcap 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 Voya Midcap

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

The idea behind Voya Solution Aggressive and Voya Midcap Opportunities 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.