Correlation Between Voya Gnma and Touchstone Large

Can any of the company-specific risk be diversified away by investing in both Voya Gnma and Touchstone Large 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 Touchstone Large 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 Touchstone Large Cap, you can compare the effects of market volatilities on Voya Gnma and Touchstone Large 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 Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Gnma and Touchstone Large.

Diversification Opportunities for Voya Gnma and Touchstone Large

-0.27

Correlation Coefficient

Voya Gnma  Touchstone Large

Very good diversification

The 3 months correlation between Voya and Touchstone is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Voya Gnma Income and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap 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 Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Voya Gnma i.e., Voya Gnma and Touchstone Large go up and down completely randomly.

Pair Corralation between Voya Gnma and Touchstone Large

Assuming the 90 days horizon Voya Gnma is expected to generate 2.27 times less return on investment than Touchstone Large. But when comparing it to its historical volatility, Voya Gnma Income is 1.6 times less risky than Touchstone Large. It trades about 0.06 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,598  in Touchstone Large Cap on September 26, 2024 and sell it today you would earn a total of  329.00  from holding Touchstone Large Cap or generate 20.59% return on investment over 90 days.

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

Voya Gnma Income  vs.  Touchstone Large Cap

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.

Touchstone Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Touchstone Large 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 Touchstone Large

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

The idea behind Voya Gnma Income and Touchstone Large Cap 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.