Correlation Between Voya Floating and Summit Global

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

By analyzing existing cross correlation between Voya Floating Rate and Summit Global Investments, you can compare the effects of market volatilities on Voya Floating and Summit Global 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 Floating with a short position of Summit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Floating and Summit Global.

Diversification Opportunities for Voya Floating and Summit Global

-0.11

Correlation Coefficient

Voya Floating  Summit Global

Good diversification

The 3 months correlation between Voya and Summit is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Voya Floating Rate and Summit Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Global Investments and Voya Floating 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 Floating Rate are associated (or correlated) with Summit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Global Investments has no effect on the direction of Voya Floating i.e., Voya Floating and Summit Global go up and down completely randomly.

Pair Corralation between Voya Floating and Summit Global

Assuming the 90 days horizon Voya Floating is expected to generate 7.56 times less return on investment than Summit Global. But when comparing it to its historical volatility, Voya Floating Rate is 4.03 times less risky than Summit Global. It trades about 0.06 of its potential returns per unit of risk. Summit Global Investments is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,136  in Summit Global Investments on December 20, 2024 and sell it today you would earn a total of  120.00  from holding Summit Global Investments or generate 3.83% return on investment over 90 days.

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

Voya Floating Rate  vs.  Summit Global Investments

Voya Floating Rate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Floating Rate are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Voya Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Summit Global Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Global Investments are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Summit Global 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 Floating and Summit Global

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

The idea behind Voya Floating Rate and Summit Global Investments 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.