Correlation Between Voya Index and Oil Gas

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

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

Diversification Opportunities for Voya Index and Oil Gas

0.23

Correlation Coefficient

Voya Index  Oil Gas

Modest diversification

The 3 months correlation between Voya and Oil is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector and Voya Index 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 Index Solution are associated (or correlated) with Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Voya Index i.e., Voya Index and Oil Gas go up and down completely randomly.

Pair Corralation between Voya Index and Oil Gas

Assuming the 90 days horizon Voya Index Solution is expected to generate 0.4 times more return on investment than Oil Gas. However, Voya Index Solution is 2.47 times less risky than Oil Gas. It trades about -0.11 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about -0.8 per unit of risk. If you would invest  1,610  in Voya Index Solution on September 23, 2024 and sell it today you would lose (21.00) from holding Voya Index Solution or give up 1.3% of portfolio value over 90 days.

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

Voya Index Solution  vs.  Oil Gas Ultrasector

Voya Index Solution

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oil Gas Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Gas Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Index and Oil Gas

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

The idea behind Voya Index Solution and Oil Gas Ultrasector 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.