Correlation Between Qs Growth and Voya Small

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

By analyzing existing cross correlation between Qs Growth Fund and Voya Small Pany, you can compare the effects of market volatilities on Qs Growth and Voya Small 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 Qs Growth with a short position of Voya Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Growth and Voya Small.

Diversification Opportunities for Qs Growth and Voya Small

0.32

Correlation Coefficient

Qs Growth  Voya Small

Weak diversification

The 3 months correlation between LANIX and Voya is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Qs Growth Fund and Voya Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Small Pany and Qs Growth 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 Qs Growth Fund are associated (or correlated) with Voya Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Small Pany has no effect on the direction of Qs Growth i.e., Qs Growth and Voya Small go up and down completely randomly.

Pair Corralation between Qs Growth and Voya Small

Assuming the 90 days horizon Qs Growth Fund is expected to under-perform the Voya Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Qs Growth Fund is 1.06 times less risky than Voya Small. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Voya Small Pany is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,600  in Voya Small Pany on December 19, 2024 and sell it today you would lose (59.00) from holding Voya Small Pany or give up 3.69% of portfolio value over 90 days.

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

Qs Growth Fund  vs.  Voya Small Pany

Qs Growth Fund

Risk-Adjusted Performance

Very Weak

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

Voya Small Pany

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Qs Growth and Voya Small

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

The idea behind Qs Growth Fund and Voya Small Pany 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.