Correlation Between Voya Stock and WPLAU

Can any of the company-specific risk be diversified away by investing in both Voya Stock and WPLAU 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 WPLAU 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 WPLAU 37 15 SEP 26, you can compare the effects of market volatilities on Voya Stock and WPLAU 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 WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Stock and WPLAU.

Diversification Opportunities for Voya Stock and WPLAU

0.62

Correlation Coefficient

Voya Stock  WPLAU

Poor diversification

The 3 months correlation between Voya and WPLAU is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Voya Stock Index and WPLAU 37 15 SEP 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 37 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 WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 37 15 has no effect on the direction of Voya Stock i.e., Voya Stock and WPLAU go up and down completely randomly.

Pair Corralation between Voya Stock and WPLAU

Assuming the 90 days horizon Voya Stock Index is expected to generate 2.94 times more return on investment than WPLAU. However, Voya Stock is 2.94 times more volatile than WPLAU 37 15 SEP 26. It trades about 0.06 of its potential returns per unit of risk. WPLAU 37 15 SEP 26 is currently generating about -0.05 per unit of risk. If you would invest  1,953  in Voya Stock Index on September 23, 2024 and sell it today you would earn a total of  54.00  from holding Voya Stock Index or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	47.69%
Values	Daily Returns

Voya Stock Index  vs.  WPLAU 37 15 SEP 26

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.

WPLAU 37 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPLAU 37 15 SEP 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WPLAU 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 Stock and WPLAU

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

The idea behind Voya Stock Index and WPLAU 37 15 SEP 26 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.