Correlation Between Large Cap and Voya Balanced

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

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

Diversification Opportunities for Large Cap and Voya Balanced

0.05

Correlation Coefficient

Large Cap  Voya Balanced

Significant diversification

The 3 months correlation between Large and Voya is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Voya Balanced Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Balanced Portfolio and Large Cap 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 Large Cap Growth Profund are associated (or correlated) with Voya Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Balanced Portfolio has no effect on the direction of Large Cap i.e., Large Cap and Voya Balanced go up and down completely randomly.

Pair Corralation between Large Cap and Voya Balanced

Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 1.42 times more return on investment than Voya Balanced. However, Large Cap is 1.42 times more volatile than Voya Balanced Portfolio. It trades about 0.1 of its potential returns per unit of risk. Voya Balanced Portfolio is currently generating about 0.03 per unit of risk. If you would invest  2,791  in Large Cap Growth Profund on October 4, 2024 and sell it today you would earn a total of  1,761  from holding Large Cap Growth Profund or generate 63.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.36%
Values	Daily Returns

Large Cap Growth Profund  vs.  Voya Balanced Portfolio

Large Cap Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Large Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Balanced Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Large Cap and Voya Balanced

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

The idea behind Large Cap Growth Profund and Voya Balanced Portfolio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.