Correlation Between Voya Large and Voya Solution

Can any of the company-specific risk be diversified away by investing in both Voya Large 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 Large 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 Large Cap and Voya Solution Aggressive, you can compare the effects of market volatilities on Voya Large 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 Large with a short position of Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Large and Voya Solution.

Diversification Opportunities for Voya Large and Voya Solution

0.9

Correlation Coefficient

Voya Large  Voya Solution

Almost no diversification

The 3 months correlation between Voya and Voya is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Voya Large Cap and Voya Solution Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Aggressive and Voya Large 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 Large Cap 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 Aggressive has no effect on the direction of Voya Large i.e., Voya Large and Voya Solution go up and down completely randomly.

Pair Corralation between Voya Large and Voya Solution

Assuming the 90 days horizon Voya Large Cap is expected to under-perform the Voya Solution. But the mutual fund apears to be less risky and, when comparing its historical volatility, Voya Large Cap is 1.04 times less risky than Voya Solution. The mutual fund trades about -0.44 of its potential returns per unit of risk. The Voya Solution Aggressive is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  1,545  in Voya Solution Aggressive on September 24, 2024 and sell it today you would lose (47.00) from holding Voya Solution Aggressive or give up 3.04% of portfolio value over 90 days.

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

Voya Large Cap  vs.  Voya Solution Aggressive

Voya Large Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Solution Aggressive

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Aggressive are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary 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 Large and Voya Solution

The main advantage of trading using opposite Voya Large and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Large 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 Large Cap and Voya Solution Aggressive 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.