Correlation Between Visa and Voya Floating

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

By analyzing existing cross correlation between Visa Class A and Voya Floating Rate, you can compare the effects of market volatilities on Visa and Voya Floating 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 Visa with a short position of Voya Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Voya Floating.

Diversification Opportunities for Visa and Voya Floating

0.74

Correlation Coefficient

Visa  Voya Floating

Poor diversification

The 3 months correlation between Visa and Voya is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Voya Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Floating Rate and Visa 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 Visa Class A are associated (or correlated) with Voya Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Floating Rate has no effect on the direction of Visa i.e., Visa and Voya Floating go up and down completely randomly.

Pair Corralation between Visa and Voya Floating

Taking into account the 90-day investment horizon Visa Class A is expected to generate 7.47 times more return on investment than Voya Floating. However, Visa is 7.47 times more volatile than Voya Floating Rate. It trades about 0.07 of its potential returns per unit of risk. Voya Floating Rate is currently generating about 0.04 per unit of risk. If you would invest  31,777  in Visa Class A on December 17, 2024 and sell it today you would earn a total of  1,403  from holding Visa Class A or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Voya Floating Rate

Visa Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Voya Floating Rate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Floating Rate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Voya Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Voya Floating

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

The idea behind Visa Class A and Voya Floating Rate 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.