Correlation Between Voya Balanced and Baron Health

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

By analyzing existing cross correlation between Voya Balanced Portfolio and Baron Health Care, you can compare the effects of market volatilities on Voya Balanced and Baron Health 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 Balanced with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Balanced and Baron Health.

Diversification Opportunities for Voya Balanced and Baron Health

0.13

Correlation Coefficient

Voya Balanced  Baron Health

Average diversification

The 3 months correlation between Voya and Baron is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Voya Balanced Portfolio and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Voya Balanced 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 Balanced Portfolio are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Voya Balanced i.e., Voya Balanced and Baron Health go up and down completely randomly.

Pair Corralation between Voya Balanced and Baron Health

Assuming the 90 days horizon Voya Balanced Portfolio is expected to generate 0.84 times more return on investment than Baron Health. However, Voya Balanced Portfolio is 1.19 times less risky than Baron Health. It trades about 0.03 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.02 per unit of risk. If you would invest  1,295  in Voya Balanced Portfolio on October 4, 2024 and sell it today you would earn a total of  90.00  from holding Voya Balanced Portfolio or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.36%
Values	Daily Returns

Voya Balanced Portfolio  vs.  Baron Health Care

Voya Balanced Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baron Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical 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 Voya Balanced and Baron Health

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

The idea behind Voya Balanced Portfolio and Baron Health Care 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.