Correlation Between Royce Opportunity and Voya Intermediate

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

By analyzing existing cross correlation between Royce Opportunity Fund and Voya Intermediate Bond, you can compare the effects of market volatilities on Royce Opportunity and Voya Intermediate 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 Royce Opportunity with a short position of Voya Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Voya Intermediate.

Diversification Opportunities for Royce Opportunity and Voya Intermediate

0.28

Correlation Coefficient

Royce Opportunity  Voya Intermediate

Modest diversification

The 3 months correlation between Royce and Voya is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Voya Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Intermediate Bond and Royce Opportunity 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 Royce Opportunity Fund are associated (or correlated) with Voya Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Intermediate Bond has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Voya Intermediate go up and down completely randomly.

Pair Corralation between Royce Opportunity and Voya Intermediate

Assuming the 90 days horizon Royce Opportunity Fund is expected to under-perform the Voya Intermediate. In addition to that, Royce Opportunity is 5.11 times more volatile than Voya Intermediate Bond. It trades about -0.19 of its total potential returns per unit of risk. Voya Intermediate Bond is currently generating about 0.05 per unit of volatility. If you would invest  1,080  in Voya Intermediate Bond on December 1, 2024 and sell it today you would earn a total of  10.00  from holding Voya Intermediate Bond or generate 0.93% return on investment over 90 days.

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

Royce Opportunity Fund  vs.  Voya Intermediate Bond

Royce Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Opportunity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Voya Intermediate Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Intermediate Bond are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Royce Opportunity and Voya Intermediate

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

The idea behind Royce Opportunity Fund and Voya Intermediate Bond 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.