Correlation Between Voya Government and Western Asset

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

By analyzing existing cross correlation between Voya Government Money and Western Asset Adjustable, you can compare the effects of market volatilities on Voya Government and Western Asset 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 Government with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Government and Western Asset.

Diversification Opportunities for Voya Government and Western Asset

0.0

Correlation Coefficient

Voya Government  Western Asset

Pay attention - limited upside

The 3 months correlation between Voya and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Voya Government Money and Western Asset Adjustable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Adjustable and Voya Government 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 Government Money are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Adjustable has no effect on the direction of Voya Government i.e., Voya Government and Western Asset go up and down completely randomly.

Pair Corralation between Voya Government and Western Asset

Assuming the 90 days horizon Voya Government is expected to generate 1.48 times less return on investment than Western Asset. In addition to that, Voya Government is 1.46 times more volatile than Western Asset Adjustable. It trades about 0.13 of its total potential returns per unit of risk. Western Asset Adjustable is currently generating about 0.28 per unit of volatility. If you would invest  887.00  in Western Asset Adjustable on October 26, 2024 and sell it today you would earn a total of  27.00  from holding Western Asset Adjustable or generate 3.04% return on investment over 90 days.

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

Voya Government Money  vs.  Western Asset Adjustable

Voya Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset Adjustable

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Adjustable are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Western Asset 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 Government and Western Asset

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

The idea behind Voya Government Money and Western Asset Adjustable 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.