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

0.96

Correlation Coefficient

Voya Large  Voya Solution

Almost no diversification

The 3 months correlation between Voya and Voya is 0.96. 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 is expected to generate 1.32 times less return on investment than Voya Solution. In addition to that, Voya Large is 1.09 times more volatile than Voya Solution Aggressive. It trades about 0.07 of its total potential returns per unit of risk. Voya Solution Aggressive is currently generating about 0.11 per unit of volatility. If you would invest  1,339  in Voya Solution Aggressive on September 12, 2024 and sell it today you would earn a total of  138.00  from holding Voya Solution Aggressive or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.2%
Values	Daily Returns

Voya Large Cap  vs.  Voya Solution Aggressive

Voya Large Cap

Risk-Adjusted Performance

14 of 100

Good

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

Voya Solution Aggressive

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Aggressive are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Solution may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.