Correlation Between Voya International and Voya Solution

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

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

Diversification Opportunities for Voya International and Voya Solution

-0.44

Correlation Coefficient

Voya International  Voya Solution

Very good diversification

The 3 months correlation between Voya and Voya is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Voya International Index and Voya Solution Moderately in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Moderately and Voya International 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 International Index are associated (or correlated) with Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution Moderately has no effect on the direction of Voya International i.e., Voya International and Voya Solution go up and down completely randomly.

Pair Corralation between Voya International and Voya Solution

Assuming the 90 days horizon Voya International Index is expected to under-perform the Voya Solution. In addition to that, Voya International is 1.14 times more volatile than Voya Solution Moderately. It trades about -0.14 of its total potential returns per unit of risk. Voya Solution Moderately is currently generating about -0.11 per unit of volatility. If you would invest  1,268  in Voya Solution Moderately on September 24, 2024 and sell it today you would lose (20.00) from holding Voya Solution Moderately or give up 1.58% of portfolio value over 90 days.

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

Voya International Index  vs.  Voya Solution Moderately

Voya International Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Solution Moderately

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Moderately are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution 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 International and Voya Solution

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

The idea behind Voya International Index and Voya Solution Moderately 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.