Correlation Between Sierra Core and Voya Morgan

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

By analyzing existing cross correlation between Sierra E Retirement and Voya Morgan Stanley, you can compare the effects of market volatilities on Sierra Core and Voya Morgan 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 Sierra Core with a short position of Voya Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Voya Morgan.

Diversification Opportunities for Sierra Core and Voya Morgan

0.61

Correlation Coefficient

Sierra Core  Voya Morgan

Poor diversification

The 3 months correlation between Sierra and Voya is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Voya Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Morgan Stanley and Sierra Core 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 Sierra E Retirement are associated (or correlated) with Voya Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Morgan Stanley has no effect on the direction of Sierra Core i.e., Sierra Core and Voya Morgan go up and down completely randomly.

Pair Corralation between Sierra Core and Voya Morgan

Assuming the 90 days horizon Sierra Core is expected to generate 3.84 times less return on investment than Voya Morgan. But when comparing it to its historical volatility, Sierra E Retirement is 2.13 times less risky than Voya Morgan. It trades about 0.04 of its potential returns per unit of risk. Voya Morgan Stanley is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,265  in Voya Morgan Stanley on October 9, 2024 and sell it today you would earn a total of  283.00  from holding Voya Morgan Stanley or generate 22.37% return on investment over 90 days.

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

Sierra E Retirement  vs.  Voya Morgan Stanley

Sierra E Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Morgan Stanley

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sierra Core and Voya Morgan

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

The idea behind Sierra E Retirement and Voya Morgan Stanley 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.