Correlation Between Voya Limited and Index Plus

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

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

Diversification Opportunities for Voya Limited and Index Plus

-0.29

Correlation Coefficient

Voya Limited  Index Plus

Very good diversification

The 3 months correlation between Voya and Index is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Voya Limited Maturity and Index Plus Largecap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Index Plus Largecap and Voya Limited 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 Limited Maturity are associated (or correlated) with Index Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Index Plus Largecap has no effect on the direction of Voya Limited i.e., Voya Limited and Index Plus go up and down completely randomly.

Pair Corralation between Voya Limited and Index Plus

Assuming the 90 days horizon Voya Limited is expected to generate 46.79 times less return on investment than Index Plus. But when comparing it to its historical volatility, Voya Limited Maturity is 6.04 times less risky than Index Plus. It trades about 0.03 of its potential returns per unit of risk. Index Plus Largecap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,757  in Index Plus Largecap on September 2, 2024 and sell it today you would earn a total of  281.00  from holding Index Plus Largecap or generate 10.19% return on investment over 90 days.

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

Voya Limited Maturity  vs.  Index Plus Largecap

Voya Limited Maturity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Limited Maturity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Voya Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Index Plus Largecap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Index Plus Largecap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Index Plus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Voya Limited and Index Plus

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

The idea behind Voya Limited Maturity and Index Plus Largecap 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.