Correlation Between Voya Gnma and Ab High

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

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

Diversification Opportunities for Voya Gnma and Ab High

0.28

Correlation Coefficient

Voya Gnma  Ab High

Modest diversification

The 3 months correlation between Voya and AGDIX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Voya Gnma Income and Ab High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab High Income and Voya Gnma 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 Gnma Income are associated (or correlated) with Ab High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab High Income has no effect on the direction of Voya Gnma i.e., Voya Gnma and Ab High go up and down completely randomly.

Pair Corralation between Voya Gnma and Ab High

Assuming the 90 days horizon Voya Gnma is expected to generate 5.92 times less return on investment than Ab High. In addition to that, Voya Gnma is 1.53 times more volatile than Ab High Income. It trades about 0.01 of its total potential returns per unit of risk. Ab High Income is currently generating about 0.13 per unit of volatility. If you would invest  591.00  in Ab High Income on October 10, 2024 and sell it today you would earn a total of  112.00  from holding Ab High Income or generate 18.95% return on investment over 90 days.

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

Voya Gnma Income  vs.  Ab High Income

Voya Gnma Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ab High Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ab High Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab High 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 Gnma and Ab High

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

The idea behind Voya Gnma Income and Ab High Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.