Correlation Between Voya Large and NISOURCE

Can any of the company-specific risk be diversified away by investing in both Voya Large and NISOURCE 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 NISOURCE 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 NISOURCE FIN P, you can compare the effects of market volatilities on Voya Large and NISOURCE 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 NISOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Large and NISOURCE.

Diversification Opportunities for Voya Large and NISOURCE

-0.36

Correlation Coefficient

Voya Large  NISOURCE

Very good diversification

The 3 months correlation between Voya and NISOURCE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Voya Large Cap Growth and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE FIN P has no effect on the direction of Voya Large i.e., Voya Large and NISOURCE go up and down completely randomly.

Pair Corralation between Voya Large and NISOURCE

Assuming the 90 days horizon Voya Large Cap Growth is expected to generate 1.24 times more return on investment than NISOURCE. However, Voya Large is 1.24 times more volatile than NISOURCE FIN P. It trades about 0.11 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about 0.01 per unit of risk. If you would invest  4,352  in Voya Large Cap Growth on October 10, 2024 and sell it today you would earn a total of  1,467  from holding Voya Large Cap Growth or generate 33.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

Voya Large Cap Growth  vs.  NISOURCE FIN P

Voya Large Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap Growth are ranked lower than 8 (%) 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.

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE 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 NISOURCE

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

The idea behind Voya Large Cap Growth and NISOURCE FIN P 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.