Correlation Between Voya Infrastructure and Voya Emerging

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

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

Diversification Opportunities for Voya Infrastructure and Voya Emerging

0.79

Correlation Coefficient

Voya Infrastructure  Voya Emerging

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 Infrastructure Industrial and Voya Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Emerging Markets and Voya Infrastructure 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 Infrastructure Industrials are associated (or correlated) with Voya Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Emerging Markets has no effect on the direction of Voya Infrastructure i.e., Voya Infrastructure and Voya Emerging go up and down completely randomly.

Pair Corralation between Voya Infrastructure and Voya Emerging

Considering the 90-day investment horizon Voya Infrastructure is expected to generate 1.02 times less return on investment than Voya Emerging. But when comparing it to its historical volatility, Voya Infrastructure Industrials is 1.24 times less risky than Voya Emerging. It trades about 0.13 of its potential returns per unit of risk. Voya Emerging Markets is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Voya Emerging Markets on December 25, 2024 and sell it today you would earn a total of  32.00  from holding Voya Emerging Markets or generate 6.4% return on investment over 90 days.

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

Voya Infrastructure Industrial  vs.  Voya Emerging Markets

Voya Infrastructure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Infrastructure Industrials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Voya Infrastructure may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Voya Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather inconsistent technical indicators, Voya Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Voya Infrastructure and Voya Emerging

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

The idea behind Voya Infrastructure Industrials and Voya Emerging Markets 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.