Correlation Between Voya Global and Virtus Multi-sector

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

By analyzing existing cross correlation between Voya Global Equity and Virtus Multi Sector Short, you can compare the effects of market volatilities on Voya Global and Virtus Multi-sector 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 Global with a short position of Virtus Multi-sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Global and Virtus Multi-sector.

Diversification Opportunities for Voya Global and Virtus Multi-sector

0.36

Correlation Coefficient

Voya Global  Virtus Multi-sector

Weak diversification

The 3 months correlation between Voya and Virtus is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Equity and Virtus Multi Sector Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Sector and Voya Global 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 Global Equity are associated (or correlated) with Virtus Multi-sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Sector has no effect on the direction of Voya Global i.e., Voya Global and Virtus Multi-sector go up and down completely randomly.

Pair Corralation between Voya Global and Virtus Multi-sector

Assuming the 90 days horizon Voya Global Equity is expected to generate 3.81 times more return on investment than Virtus Multi-sector. However, Voya Global is 3.81 times more volatile than Virtus Multi Sector Short. It trades about 0.08 of its potential returns per unit of risk. Virtus Multi Sector Short is currently generating about 0.13 per unit of risk. If you would invest  3,750  in Voya Global Equity on October 9, 2024 and sell it today you would earn a total of  418.00  from holding Voya Global Equity or generate 11.15% return on investment over 90 days.

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

Voya Global Equity  vs.  Virtus Multi Sector Short

Voya Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Multi Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Multi Sector Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Virtus Multi-sector 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 Global and Virtus Multi-sector

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

The idea behind Voya Global Equity and Virtus Multi Sector Short 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.