Correlation Between Voya Index and Columbia Global

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

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

Diversification Opportunities for Voya Index and Columbia Global

0.74

Correlation Coefficient

Voya Index  Columbia Global

Poor diversification

The 3 months correlation between Voya and Columbia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Plus and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech and Voya Index 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 Index Plus are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Voya Index i.e., Voya Index and Columbia Global go up and down completely randomly.

Pair Corralation between Voya Index and Columbia Global

Assuming the 90 days horizon Voya Index Plus is expected to under-perform the Columbia Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Voya Index Plus is 1.24 times less risky than Columbia Global. The mutual fund trades about -0.3 of its potential returns per unit of risk. The Columbia Global Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  9,157  in Columbia Global Technology on September 27, 2024 and sell it today you would earn a total of  322.00  from holding Columbia Global Technology or generate 3.52% return on investment over 90 days.

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

Voya Index Plus  vs.  Columbia Global Technology

Voya Index Plus

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Index Plus are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Columbia Global Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Voya Index and Columbia Global

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

The idea behind Voya Index Plus and Columbia Global Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.