Correlation Between Voya International and Voya Index

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

Diversification Opportunities for Voya International and Voya Index

-0.5

Correlation Coefficient

Voya International  Voya Index

Very good diversification

The 3 months correlation between Voya and Voya is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Voya International Index and Voya Index Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Plus 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 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Plus has no effect on the direction of Voya International i.e., Voya International and Voya Index go up and down completely randomly.

Pair Corralation between Voya International and Voya Index

Assuming the 90 days horizon Voya International Index is expected to generate 0.87 times more return on investment than Voya Index. However, Voya International Index is 1.15 times less risky than Voya Index. It trades about 0.18 of its potential returns per unit of risk. Voya Index Plus is currently generating about -0.07 per unit of risk. If you would invest  1,104  in Voya International Index on December 28, 2024 and sell it today you would earn a total of  108.00  from holding Voya International Index or generate 9.78% return on investment 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 Index Plus

Voya International Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya International Index are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Voya International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Voya Index Plus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Index Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Voya Index 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 Index

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

The idea behind Voya International Index and Voya Index Plus 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.