Correlation Between Voya Global and Voya Solution

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

Diversification Opportunities for Voya Global and Voya Solution

0.82

Correlation Coefficient

Voya Global  Voya Solution

Very poor diversification

The 3 months correlation between Voya and Voya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Perspectives 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 Global 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 Global Perspectives 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 Global i.e., Voya Global and Voya Solution go up and down completely randomly.

Pair Corralation between Voya Global and Voya Solution

Assuming the 90 days horizon Voya Global is expected to generate 1.29 times less return on investment than Voya Solution. But when comparing it to its historical volatility, Voya Global Perspectives is 1.48 times less risky than Voya Solution. It trades about 0.12 of its potential returns per unit of risk. Voya Solution Aggressive is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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	Strong
Accuracy	99.2%
Values	Daily Returns

Voya Global Perspectives  vs.  Voya Solution Aggressive

Voya Global Perspectives

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Perspectives are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Global 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

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 Global and Voya Solution

The main advantage of trading using opposite Voya Global and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Global 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 Global Perspectives 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.