Correlation Between Voya Midcap and Federated Hermes

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

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

Diversification Opportunities for Voya Midcap and Federated Hermes

0.61

Correlation Coefficient

Voya Midcap  Federated Hermes

Poor diversification

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

Pair Corralation between Voya Midcap and Federated Hermes

Assuming the 90 days horizon Voya Midcap Opportunities is expected to generate 13.41 times more return on investment than Federated Hermes. However, Voya Midcap is 13.41 times more volatile than Federated Hermes Conservative. It trades about 0.16 of its potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.22 per unit of risk. If you would invest  556.00  in Voya Midcap Opportunities on October 25, 2024 and sell it today you would earn a total of  70.00  from holding Voya Midcap Opportunities or generate 12.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Voya Midcap Opportunities  vs.  Federated Hermes Conservative

Voya Midcap Opportunities

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Midcap showed solid returns over the last few months and may actually be approaching a breakup point.

Federated Hermes Con

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Conservative are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes 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 Midcap and Federated Hermes

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

The idea behind Voya Midcap Opportunities and Federated Hermes Conservative 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.