Correlation Between Short Precious and Voya Midcap

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

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

Diversification Opportunities for Short Precious and Voya Midcap

0.65

Correlation Coefficient

Short Precious  Voya Midcap

Poor diversification

The 3 months correlation between Short and Voya is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals 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 Short Precious 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 Short Precious Metals 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 Short Precious i.e., Short Precious and Voya Midcap go up and down completely randomly.

Pair Corralation between Short Precious and Voya Midcap

Assuming the 90 days horizon Short Precious Metals is expected to generate 1.44 times more return on investment than Voya Midcap. However, Short Precious is 1.44 times more volatile than Voya Midcap Opportunities. It trades about 0.18 of its potential returns per unit of risk. Voya Midcap Opportunities is currently generating about 0.16 per unit of risk. If you would invest  919.00  in Short Precious Metals on October 1, 2024 and sell it today you would earn a total of  139.00  from holding Short Precious Metals or generate 15.13% return on investment over 90 days.

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

Short Precious Metals  vs.  Voya Midcap Opportunities

Short Precious Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Precious Metals are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Precious showed solid returns over the last few months and may actually be approaching a breakup point.

Voya Midcap Opportunities

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Short Precious and Voya Midcap

The main advantage of trading using opposite Short Precious and Voya Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Precious 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 Short Precious Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.