Correlation Between Voya Vacs and Ishares Municipal

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

By analyzing existing cross correlation between Voya Vacs Series and Ishares Municipal Bond, you can compare the effects of market volatilities on Voya Vacs and Ishares Municipal 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 Vacs with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Vacs and Ishares Municipal.

Diversification Opportunities for Voya Vacs and Ishares Municipal

0.44

Correlation Coefficient

Voya Vacs  Ishares Municipal

Very weak diversification

The 3 months correlation between Voya and Ishares is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Voya Vacs Series and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Voya Vacs 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 Vacs Series are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Voya Vacs i.e., Voya Vacs and Ishares Municipal go up and down completely randomly.

Pair Corralation between Voya Vacs and Ishares Municipal

Assuming the 90 days horizon Voya Vacs Series is expected to generate 4.6 times more return on investment than Ishares Municipal. However, Voya Vacs is 4.6 times more volatile than Ishares Municipal Bond. It trades about 0.09 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.03 per unit of risk. If you would invest  1,046  in Voya Vacs Series on December 20, 2024 and sell it today you would earn a total of  55.00  from holding Voya Vacs Series or generate 5.26% return on investment over 90 days.

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

Voya Vacs Series  vs.  Ishares Municipal Bond

Voya Vacs Series

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Vacs Series are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Voya Vacs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Municipal Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Municipal Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ishares Municipal 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 Vacs and Ishares Municipal

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

The idea behind Voya Vacs Series and Ishares Municipal Bond 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.