Correlation Between Vanguard Ftse and Voya Investment

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

By analyzing existing cross correlation between Vanguard Ftse All World and Voya Investment Grade, you can compare the effects of market volatilities on Vanguard Ftse and Voya Investment 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 Vanguard Ftse with a short position of Voya Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Ftse and Voya Investment.

Diversification Opportunities for Vanguard Ftse and Voya Investment

0.83

Correlation Coefficient

Vanguard Ftse  Voya Investment

Very poor diversification

The 3 months correlation between Vanguard and Voya is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Ftse All World and Voya Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Investment Grade and Vanguard Ftse 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 Vanguard Ftse All World are associated (or correlated) with Voya Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Investment Grade has no effect on the direction of Vanguard Ftse i.e., Vanguard Ftse and Voya Investment go up and down completely randomly.

Pair Corralation between Vanguard Ftse and Voya Investment

Assuming the 90 days horizon Vanguard Ftse All World is expected to generate 2.54 times more return on investment than Voya Investment. However, Vanguard Ftse is 2.54 times more volatile than Voya Investment Grade. It trades about 0.17 of its potential returns per unit of risk. Voya Investment Grade is currently generating about 0.14 per unit of risk. If you would invest  3,583  in Vanguard Ftse All World on December 21, 2024 and sell it today you would earn a total of  301.00  from holding Vanguard Ftse All World or generate 8.4% return on investment over 90 days.

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

Vanguard Ftse All World  vs.  Voya Investment Grade

Vanguard Ftse All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ftse All World are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Ftse may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Voya Investment Grade

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Investment Grade are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Ftse and Voya Investment

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

The idea behind Vanguard Ftse All World and Voya Investment Grade 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.