Correlation Between Voya Stock and Via Renewables

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

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

Diversification Opportunities for Voya Stock and Via Renewables

0.74

Correlation Coefficient

Voya Stock  Via Renewables

Poor diversification

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

Pair Corralation between Voya Stock and Via Renewables

Assuming the 90 days horizon Voya Stock Index is expected to generate 0.68 times more return on investment than Via Renewables. However, Voya Stock Index is 1.48 times less risky than Via Renewables. It trades about 0.37 of its potential returns per unit of risk. Via Renewables is currently generating about 0.04 per unit of risk. If you would invest  1,912  in Voya Stock Index on September 16, 2024 and sell it today you would earn a total of  60.00  from holding Voya Stock Index or generate 3.14% return on investment over 90 days.

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

Voya Stock Index  vs.  Via Renewables

Voya Stock Index

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Stock Index 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 Stock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Via Renewables

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Voya Stock and Via Renewables

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

The idea behind Voya Stock Index and Via Renewables 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.