Correlation Between Mid Cap and Voya Us

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Voya Bond Index, you can compare the effects of market volatilities on Mid Cap and Voya Us 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 Mid Cap with a short position of Voya Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Voya Us.

Diversification Opportunities for Mid Cap and Voya Us

0.48

Correlation Coefficient

Mid Cap  Voya Us

Very weak diversification

The 3 months correlation between Mid and Voya is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Voya Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Bond Index and Mid 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 Mid Cap 15x Strategy are associated (or correlated) with Voya Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Bond Index has no effect on the direction of Mid Cap i.e., Mid Cap and Voya Us go up and down completely randomly.

Pair Corralation between Mid Cap and Voya Us

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 4.75 times more return on investment than Voya Us. However, Mid Cap is 4.75 times more volatile than Voya Bond Index. It trades about 0.03 of its potential returns per unit of risk. Voya Bond Index is currently generating about 0.04 per unit of risk. If you would invest  12,725  in Mid Cap 15x Strategy on October 9, 2024 and sell it today you would earn a total of  684.00  from holding Mid Cap 15x Strategy or generate 5.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Mid Cap 15x Strategy  vs.  Voya Bond Index

Mid Cap 15x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Bond Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mid Cap and Voya Us

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

The idea behind Mid Cap 15x Strategy and Voya Bond Index 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.