Correlation Between Voya Stock and BHCCN

Can any of the company-specific risk be diversified away by investing in both Voya Stock and BHCCN 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 BHCCN 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 BHCCN 14 15 OCT 30, you can compare the effects of market volatilities on Voya Stock and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Stock and BHCCN.

Diversification Opportunities for Voya Stock and BHCCN

0.75

Correlation Coefficient

Voya Stock  BHCCN

Poor diversification

The 3 months correlation between Voya and BHCCN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Voya Stock Index and BHCCN 14 15 OCT 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 14 15 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 14 15 has no effect on the direction of Voya Stock i.e., Voya Stock and BHCCN go up and down completely randomly.

Pair Corralation between Voya Stock and BHCCN

Assuming the 90 days horizon Voya Stock is expected to generate 2.31 times less return on investment than BHCCN. But when comparing it to its historical volatility, Voya Stock Index is 2.48 times less risky than BHCCN. It trades about 0.06 of its potential returns per unit of risk. BHCCN 14 15 OCT 30 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,944  in BHCCN 14 15 OCT 30 on September 23, 2024 and sell it today you would earn a total of  1,924  from holding BHCCN 14 15 OCT 30 or generate 32.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	52.11%
Values	Daily Returns

Voya Stock Index  vs.  BHCCN 14 15 OCT 30

Voya Stock Index

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Stock Index are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Voya Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BHCCN 14 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 14 15 OCT 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for BHCCN 14 15 OCT 30 investors.

Pair Trading with Voya Stock and BHCCN

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

The idea behind Voya Stock Index and BHCCN 14 15 OCT 30 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.