Correlation Between Sprott Gold and Voya Midcap

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

By analyzing existing cross correlation between Sprott Gold Equity and Voya Midcap Opportunities, you can compare the effects of market volatilities on Sprott Gold and Voya Midcap 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 Sprott Gold with a short position of Voya Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and Voya Midcap.

Diversification Opportunities for Sprott Gold and Voya Midcap

0.21

Correlation Coefficient

Sprott Gold  Voya Midcap

Modest diversification

The 3 months correlation between Sprott and Voya is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Voya Midcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Midcap Opportunities and Sprott Gold 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 Sprott Gold Equity are associated (or correlated) with Voya Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Midcap Opportunities has no effect on the direction of Sprott Gold i.e., Sprott Gold and Voya Midcap go up and down completely randomly.

Pair Corralation between Sprott Gold and Voya Midcap

Assuming the 90 days horizon Sprott Gold Equity is expected to under-perform the Voya Midcap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sprott Gold Equity is 1.24 times less risky than Voya Midcap. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Voya Midcap Opportunities is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,816  in Voya Midcap Opportunities on October 21, 2024 and sell it today you would lose (77.00) from holding Voya Midcap Opportunities or give up 4.24% of portfolio value over 90 days.

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

Sprott Gold Equity  vs.  Voya Midcap Opportunities

Sprott Gold Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Gold Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest sluggish performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Voya Midcap Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sprott Gold and Voya Midcap

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

The idea behind Sprott Gold Equity and Voya Midcap Opportunities 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.