Correlation Between Voya Midcap and Voya Stock

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

Diversification Opportunities for Voya Midcap and Voya Stock

0.72

Correlation Coefficient

Voya Midcap  Voya Stock

Poor diversification

The 3 months correlation between Voya and Voya is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Voya Stock Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Stock 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 Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Stock Index has no effect on the direction of Voya Midcap i.e., Voya Midcap and Voya Stock go up and down completely randomly.

Pair Corralation between Voya Midcap and Voya Stock

Assuming the 90 days horizon Voya Midcap Opportunities is expected to under-perform the Voya Stock. In addition to that, Voya Midcap is 2.71 times more volatile than Voya Stock Index. It trades about -0.01 of its total potential returns per unit of risk. Voya Stock Index is currently generating about 0.08 per unit of volatility. If you would invest  1,953  in Voya Stock Index on September 22, 2024 and sell it today you would earn a total of  76.00  from holding Voya Stock Index or generate 3.89% return on investment over 90 days.

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

Voya Midcap Opportunities  vs.  Voya Stock Index

Voya Midcap Opportunities

Risk-Adjusted Performance

0 of 100

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

Voya Stock Index

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Stock Index are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Voya Stock 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 Stock

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

The idea behind Voya Midcap Opportunities and Voya Stock 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.