Correlation Between Voya Midcap and Voya International

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

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

Diversification Opportunities for Voya Midcap and Voya International

0.56

Correlation Coefficient

Voya Midcap  Voya International

Very weak diversification

The 3 months correlation between Voya and Voya is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Voya International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya International Index and Voya Midcap 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 Midcap Opportunities are associated (or correlated) with Voya International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya International Index has no effect on the direction of Voya Midcap i.e., Voya Midcap and Voya International go up and down completely randomly.

Pair Corralation between Voya Midcap and Voya International

Assuming the 90 days horizon Voya Midcap Opportunities is expected to under-perform the Voya International. In addition to that, Voya Midcap is 1.78 times more volatile than Voya International Index. It trades about -0.17 of its total potential returns per unit of risk. Voya International Index is currently generating about 0.24 per unit of volatility. If you would invest  1,155  in Voya International Index on November 28, 2024 and sell it today you would earn a total of  44.00  from holding Voya International Index or generate 3.81% return on investment over 90 days.

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

Voya Midcap Opportunities  vs.  Voya International Index

Voya Midcap Opportunities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Midcap Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Voya International Index

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya International Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Voya International 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 Midcap and Voya International

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

The idea behind Voya Midcap Opportunities and Voya International Index 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.