Correlation Between Aeye and Voya Index

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

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

Diversification Opportunities for Aeye and Voya Index

-0.15

Correlation Coefficient

Aeye  Voya Index

Good diversification

The 3 months correlation between Aeye and Voya is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution and Aeye 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 Aeye Inc are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Aeye i.e., Aeye and Voya Index go up and down completely randomly.

Pair Corralation between Aeye and Voya Index

Given the investment horizon of 90 days Aeye Inc is expected to generate 28.27 times more return on investment than Voya Index. However, Aeye is 28.27 times more volatile than Voya Index Solution. It trades about 0.17 of its potential returns per unit of risk. Voya Index Solution is currently generating about -0.07 per unit of risk. If you would invest  110.00  in Aeye Inc on October 7, 2024 and sell it today you would earn a total of  93.00  from holding Aeye Inc or generate 84.55% return on investment over 90 days.

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

Aeye Inc  vs.  Voya Index Solution

Aeye Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aeye Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Aeye reported solid returns over the last few months and may actually be approaching a breakup point.

Voya Index Solution

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aeye and Voya Index

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

The idea behind Aeye Inc and Voya Index Solution 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .