Correlation Between Voya Bond and Vy T

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

Diversification Opportunities for Voya Bond and Vy T

-0.51

Correlation Coefficient

Voya Bond  Vy T

Excellent diversification

The 3 months correlation between Voya and IAXIX is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Voya Bond Index and Vy T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy T Rowe 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 T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy T Rowe has no effect on the direction of Voya Bond i.e., Voya Bond and Vy T go up and down completely randomly.

Pair Corralation between Voya Bond and Vy T

Assuming the 90 days horizon Voya Bond is expected to generate 10.04 times less return on investment than Vy T. But when comparing it to its historical volatility, Voya Bond Index is 2.8 times less risky than Vy T. It trades about 0.02 of its potential returns per unit of risk. Vy T Rowe is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  860.00  in Vy T Rowe on September 25, 2024 and sell it today you would earn a total of  307.00  from holding Vy T Rowe or generate 35.7% return on investment over 90 days.

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

Voya Bond Index  vs.  Vy T Rowe

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 basic indicators, Voya Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vy T Rowe

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy T Rowe are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vy T may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Voya Bond and Vy T

The main advantage of trading using opposite Voya Bond and Vy T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Bond position performs unexpectedly, Vy T 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 T will offset losses from the drop in Vy T's long position.

The idea behind Voya Bond Index and Vy T Rowe 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.