Correlation Between Voya High and Calvert Green

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

By analyzing existing cross correlation between Voya High Yield and Calvert Green Bond, you can compare the effects of market volatilities on Voya High and Calvert Green 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 High with a short position of Calvert Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Calvert Green.

Diversification Opportunities for Voya High and Calvert Green

0.74

Correlation Coefficient

Voya High  Calvert Green

Poor diversification

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

Pair Corralation between Voya High and Calvert Green

Assuming the 90 days horizon Voya High is expected to generate 1.41 times less return on investment than Calvert Green. But when comparing it to its historical volatility, Voya High Yield is 1.32 times less risky than Calvert Green. It trades about 0.13 of its potential returns per unit of risk. Calvert Green Bond is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,378  in Calvert Green Bond on December 20, 2024 and sell it today you would earn a total of  29.00  from holding Calvert Green Bond or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Voya High Yield  vs.  Calvert Green Bond

Voya High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya High Yield are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Green Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Green Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Calvert Green 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 High and Calvert Green

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

The idea behind Voya High Yield and Calvert Green Bond 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.