Correlation Between Voya High and Free Market

Can any of the company-specific risk be diversified away by investing in both Voya High and Free Market 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 Free Market 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 Free Market Equity, you can compare the effects of market volatilities on Voya High and Free Market 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 Free Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Free Market.

Diversification Opportunities for Voya High and Free Market

-0.22

Correlation Coefficient

Voya High  Free Market

Very good diversification

The 3 months correlation between Voya and Free is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and Free Market Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market Equity 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 Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market Equity has no effect on the direction of Voya High i.e., Voya High and Free Market go up and down completely randomly.

Pair Corralation between Voya High and Free Market

Assuming the 90 days horizon Voya High Yield is expected to generate 0.18 times more return on investment than Free Market. However, Voya High Yield is 5.43 times less risky than Free Market. It trades about 0.12 of its potential returns per unit of risk. Free Market Equity is currently generating about -0.1 per unit of risk. If you would invest  857.00  in Voya High Yield on December 19, 2024 and sell it today you would earn a total of  12.00  from holding Voya High Yield or generate 1.4% return on investment over 90 days.

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

Voya High Yield  vs.  Free Market Equity

Voya High Yield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voya High Yield are ranked lower than 9 (%) 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.

Free Market Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Free Market Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Voya High and Free Market

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

The idea behind Voya High Yield and Free Market Equity 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 Stocks Directory module to find actively traded stocks across global markets.