Correlation Between Voya Large and Arrow Managed

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

By analyzing existing cross correlation between Voya Large Cap and Arrow Managed Futures, you can compare the effects of market volatilities on Voya Large and Arrow Managed 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 Large with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Large and Arrow Managed.

Diversification Opportunities for Voya Large and Arrow Managed

0.67

Correlation Coefficient

Voya Large  Arrow Managed

Poor diversification

The 3 months correlation between Voya and Arrow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Voya Large Cap and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and Voya Large 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 Large Cap are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Voya Large i.e., Voya Large and Arrow Managed go up and down completely randomly.

Pair Corralation between Voya Large and Arrow Managed

Assuming the 90 days horizon Voya Large Cap is expected to under-perform the Arrow Managed. In addition to that, Voya Large is 1.19 times more volatile than Arrow Managed Futures. It trades about -0.1 of its total potential returns per unit of risk. Arrow Managed Futures is currently generating about -0.07 per unit of volatility. If you would invest  570.00  in Arrow Managed Futures on October 5, 2024 and sell it today you would lose (9.00) from holding Arrow Managed Futures or give up 1.58% of portfolio value over 90 days.

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

Voya Large Cap  vs.  Arrow Managed Futures

Voya Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Large may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Arrow Managed Futures

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Managed Futures are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Arrow Managed 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 Large and Arrow Managed

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

The idea behind Voya Large Cap and Arrow Managed Futures 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.