Correlation Between Voya Bond and Vy Umbia

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

By analyzing existing cross correlation between Voya Bond Index and Vy Umbia Small, you can compare the effects of market volatilities on Voya Bond and Vy Umbia 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 Bond with a short position of Vy Umbia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Bond and Vy Umbia.

Diversification Opportunities for Voya Bond and Vy Umbia

0.49

Correlation Coefficient

Voya Bond  Vy Umbia

Very weak diversification

The 3 months correlation between Voya and ICISX is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Voya Bond Index and Vy Umbia Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Umbia Small and Voya Bond 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 Bond Index are associated (or correlated) with Vy Umbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Umbia Small has no effect on the direction of Voya Bond i.e., Voya Bond and Vy Umbia go up and down completely randomly.

Pair Corralation between Voya Bond and Vy Umbia

Assuming the 90 days horizon Voya Bond is expected to generate 7.86 times less return on investment than Vy Umbia. But when comparing it to its historical volatility, Voya Bond Index is 2.93 times less risky than Vy Umbia. It trades about 0.01 of its potential returns per unit of risk. Vy Umbia Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,482  in Vy Umbia Small on October 24, 2024 and sell it today you would earn a total of  255.00  from holding Vy Umbia Small or generate 17.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Voya Bond Index  vs.  Vy Umbia Small

Voya Bond Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Bond Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Voya Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vy Umbia Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Umbia Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vy Umbia 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 Bond and Vy Umbia

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

The idea behind Voya Bond Index and Vy Umbia Small 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.