Correlation Between Voya Midcap and Voya Gnma

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

Diversification Opportunities for Voya Midcap and Voya Gnma

-0.45

Correlation Coefficient

Voya Midcap  Voya Gnma

Very good diversification

The 3 months correlation between Voya and Voya is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Voya Gnma Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Gnma Income 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 Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Gnma Income has no effect on the direction of Voya Midcap i.e., Voya Midcap and Voya Gnma go up and down completely randomly.

Pair Corralation between Voya Midcap and Voya Gnma

Assuming the 90 days horizon Voya Midcap Opportunities is expected to under-perform the Voya Gnma. In addition to that, Voya Midcap is 5.24 times more volatile than Voya Gnma Income. It trades about -0.12 of its total potential returns per unit of risk. Voya Gnma Income is currently generating about -0.3 per unit of volatility. If you would invest  741.00  in Voya Gnma Income on September 25, 2024 and sell it today you would lose (12.00) from holding Voya Gnma Income or give up 1.62% of portfolio value over 90 days.

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

Voya Midcap Opportunities  vs.  Voya Gnma Income

Voya Midcap Opportunities

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Voya Gnma Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Gnma Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Voya Gnma 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 Gnma

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

The idea behind Voya Midcap Opportunities and Voya Gnma Income 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.