Correlation Between Voya Large and Payden Government

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

By analyzing existing cross correlation between Voya Large Cap Growth and Payden Government Fund, you can compare the effects of market volatilities on Voya Large and Payden Government 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 Payden Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Large and Payden Government.

Diversification Opportunities for Voya Large and Payden Government

-0.48

Correlation Coefficient

Voya Large  Payden Government

Very good diversification

The 3 months correlation between Voya and Payden is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Voya Large Cap Growth and Payden Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Government 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 Growth are associated (or correlated) with Payden Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Government has no effect on the direction of Voya Large i.e., Voya Large and Payden Government go up and down completely randomly.

Pair Corralation between Voya Large and Payden Government

Assuming the 90 days horizon Voya Large Cap Growth is expected to generate 8.5 times more return on investment than Payden Government. However, Voya Large is 8.5 times more volatile than Payden Government Fund. It trades about 0.15 of its potential returns per unit of risk. Payden Government Fund is currently generating about -0.09 per unit of risk. If you would invest  5,357  in Voya Large Cap Growth on October 8, 2024 and sell it today you would earn a total of  575.00  from holding Voya Large Cap Growth or generate 10.73% return on investment over 90 days.

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

Voya Large Cap Growth  vs.  Payden Government Fund

Voya Large Cap

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap Growth are ranked lower than 11 (%) 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.

Payden Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payden Government Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Payden Government 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 Payden Government

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

The idea behind Voya Large Cap Growth and Payden Government Fund 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.