Correlation Between Voya Midcap and Voya High

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

Diversification Opportunities for Voya Midcap and Voya High

0.82

Correlation Coefficient

Voya Midcap  Voya High

Very poor diversification

The 3 months correlation between Voya and Voya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Voya High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya High Yield has no effect on the direction of Voya Midcap i.e., Voya Midcap and Voya High go up and down completely randomly.

Pair Corralation between Voya Midcap and Voya High

Assuming the 90 days horizon Voya Midcap Opportunities is expected to generate 5.88 times more return on investment than Voya High. However, Voya Midcap is 5.88 times more volatile than Voya High Yield. It trades about 0.26 of its potential returns per unit of risk. Voya High Yield is currently generating about 0.2 per unit of risk. If you would invest  1,703  in Voya Midcap Opportunities on September 12, 2024 and sell it today you would earn a total of  306.00  from holding Voya Midcap Opportunities or generate 17.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Voya Midcap Opportunities  vs.  Voya High Yield

Voya Midcap Opportunities

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly conflicting basic indicators, Voya Midcap showed solid returns over the last few months and may actually be approaching a breakup point.

Voya High Yield

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya High Yield are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Voya High 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 High

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

The idea behind Voya Midcap Opportunities and Voya High Yield 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.