Correlation Between Voya Bond and Vy Jpmorgan

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

Diversification Opportunities for Voya Bond and Vy Jpmorgan

-0.41

Correlation Coefficient

Voya Bond  Vy Jpmorgan

Very good diversification

The 3 months correlation between Voya and IJSIX is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Voya Bond Index and Vy Jpmorgan Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Jpmorgan 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 Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Jpmorgan Small has no effect on the direction of Voya Bond i.e., Voya Bond and Vy Jpmorgan go up and down completely randomly.

Pair Corralation between Voya Bond and Vy Jpmorgan

Assuming the 90 days horizon Voya Bond Index is expected to under-perform the Vy Jpmorgan. But the mutual fund apears to be less risky and, when comparing its historical volatility, Voya Bond Index is 3.89 times less risky than Vy Jpmorgan. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Vy Jpmorgan Small is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,660  in Vy Jpmorgan Small on September 20, 2024 and sell it today you would lose (10.00) from holding Vy Jpmorgan Small or give up 0.6% of portfolio value over 90 days.

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

Voya Bond Index  vs.  Vy Jpmorgan 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 Jpmorgan Small

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Vy Jpmorgan Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vy Jpmorgan 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 Jpmorgan

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

The idea behind Voya Bond Index and Vy Jpmorgan 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.