Correlation Between Voya Global and Nuveen SP

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

By analyzing existing cross correlation between Voya Global Equity and Nuveen SP 500, you can compare the effects of market volatilities on Voya Global and Nuveen SP 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 Global with a short position of Nuveen SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Global and Nuveen SP.

Diversification Opportunities for Voya Global and Nuveen SP

0.38

Correlation Coefficient

Voya Global  Nuveen SP

Weak diversification

The 3 months correlation between Voya and Nuveen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Equity and Nuveen SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen SP 500 and Voya Global 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 Global Equity are associated (or correlated) with Nuveen SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen SP 500 has no effect on the direction of Voya Global i.e., Voya Global and Nuveen SP go up and down completely randomly.

Pair Corralation between Voya Global and Nuveen SP

Considering the 90-day investment horizon Voya Global Equity is expected to generate 0.98 times more return on investment than Nuveen SP. However, Voya Global Equity is 1.02 times less risky than Nuveen SP. It trades about 0.04 of its potential returns per unit of risk. Nuveen SP 500 is currently generating about 0.01 per unit of risk. If you would invest  550.00  in Voya Global Equity on December 1, 2024 and sell it today you would earn a total of  10.00  from holding Voya Global Equity or generate 1.82% return on investment over 90 days.

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

Voya Global Equity  vs.  Nuveen SP 500

Voya Global Equity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Equity are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Voya Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nuveen SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Nuveen SP 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 Global and Nuveen SP

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

The idea behind Voya Global Equity and Nuveen SP 500 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.