Correlation Between Capital Income and Voya Government

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

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

Diversification Opportunities for Capital Income and Voya Government

0.0

Correlation Coefficient

Capital Income  Voya Government

Pay attention - limited upside

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

Pair Corralation between Capital Income and Voya Government

If you would invest  6,805  in Capital Income Builder on December 20, 2024 and sell it today you would earn a total of  431.00  from holding Capital Income Builder or generate 6.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Capital Income Builder  vs.  Voya Government Money

Capital Income Builder

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Income Builder are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capital Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Voya Government Money

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Capital Income and Voya Government

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

The idea behind Capital Income Builder and Voya Government Money 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.