Correlation Between Sp Smallcap and Voya Index

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

By analyzing existing cross correlation between Sp Smallcap 600 and Voya Index Solution, you can compare the effects of market volatilities on Sp Smallcap and Voya Index 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 Sp Smallcap with a short position of Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and Voya Index.

Diversification Opportunities for Sp Smallcap and Voya Index

0.82

Correlation Coefficient

Sp Smallcap  Voya Index

Very poor diversification

The 3 months correlation between RYSVX and Voya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap 600 and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution and Sp Smallcap 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 Sp Smallcap 600 are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Sp Smallcap i.e., Sp Smallcap and Voya Index go up and down completely randomly.

Pair Corralation between Sp Smallcap and Voya Index

Assuming the 90 days horizon Sp Smallcap 600 is expected to under-perform the Voya Index. In addition to that, Sp Smallcap is 1.42 times more volatile than Voya Index Solution. It trades about -0.23 of its total potential returns per unit of risk. Voya Index Solution is currently generating about -0.04 per unit of volatility. If you would invest  1,638  in Voya Index Solution on September 27, 2024 and sell it today you would lose (12.00) from holding Voya Index Solution or give up 0.73% of portfolio value over 90 days.

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

Sp Smallcap 600  vs.  Voya Index Solution

Sp Smallcap 600

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Smallcap 600 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sp Smallcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Index Solution

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Index Solution are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sp Smallcap and Voya Index

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

The idea behind Sp Smallcap 600 and Voya Index Solution 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.