Correlation Between American Funds and Voya Limited

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

By analyzing existing cross correlation between American Funds Government and Voya Limited Maturity, you can compare the effects of market volatilities on American Funds and Voya Limited 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 American Funds with a short position of Voya Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Voya Limited.

Diversification Opportunities for American Funds and Voya Limited

0.0

Correlation Coefficient

American Funds  Voya Limited

Pay attention - limited upside

The 3 months correlation between American and Voya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Government and Voya Limited Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Limited Maturity and American Funds 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 American Funds Government are associated (or correlated) with Voya Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Limited Maturity has no effect on the direction of American Funds i.e., American Funds and Voya Limited go up and down completely randomly.

Pair Corralation between American Funds and Voya Limited

Assuming the 90 days horizon American Funds is expected to generate 1.18 times less return on investment than Voya Limited. But when comparing it to its historical volatility, American Funds Government is 1.29 times less risky than Voya Limited. It trades about 0.12 of its potential returns per unit of risk. Voya Limited Maturity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  879.00  in Voya Limited Maturity on October 9, 2024 and sell it today you would earn a total of  77.00  from holding Voya Limited Maturity or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.84%
Values	Daily Returns

American Funds Government  vs.  Voya Limited Maturity

American Funds Government

Risk-Adjusted Performance

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Very Weak

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

Voya Limited Maturity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with American Funds and Voya Limited

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

The idea behind American Funds Government and Voya Limited Maturity 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.