Correlation Between Voya Investment and Vanguard Intermediate-ter

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

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

Diversification Opportunities for Voya Investment and Vanguard Intermediate-ter

0.99

Correlation Coefficient

Voya Investment  Vanguard Intermediate-ter

No risk reduction

The 3 months correlation between Voya and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Voya Investment Grade and Vanguard Intermediate Term Por in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter and Voya Investment 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 Voya Investment Grade are associated (or correlated) with Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Voya Investment i.e., Voya Investment and Vanguard Intermediate-ter go up and down completely randomly.

Pair Corralation between Voya Investment and Vanguard Intermediate-ter

Assuming the 90 days horizon Voya Investment is expected to generate 1.08 times less return on investment than Vanguard Intermediate-ter. In addition to that, Voya Investment is 1.08 times more volatile than Vanguard Intermediate Term Porate. It trades about 0.1 of its total potential returns per unit of risk. Vanguard Intermediate Term Porate is currently generating about 0.11 per unit of volatility. If you would invest  2,149  in Vanguard Intermediate Term Porate on December 26, 2024 and sell it today you would earn a total of  45.00  from holding Vanguard Intermediate Term Porate or generate 2.09% return on investment over 90 days.

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

Voya Investment Grade  vs.  Vanguard Intermediate Term Por

Voya Investment Grade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Investment Grade are ranked lower than 7 (%) 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.

Vanguard Intermediate-ter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Porate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Intermediate-ter is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Voya Investment and Vanguard Intermediate-ter

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

The idea behind Voya Investment Grade and Vanguard Intermediate Term Porate 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.