Correlation Between Vanguard Wellesley and Voya Retirement

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

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

Diversification Opportunities for Vanguard Wellesley and Voya Retirement

0.57

Correlation Coefficient

Vanguard Wellesley  Voya Retirement

Very weak diversification

The 3 months correlation between Vanguard and Voya is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Wellesley Income and Voya Retirement Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Retirement Moderate and Vanguard Wellesley 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 Wellesley Income are associated (or correlated) with Voya Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Retirement Moderate has no effect on the direction of Vanguard Wellesley i.e., Vanguard Wellesley and Voya Retirement go up and down completely randomly.

Pair Corralation between Vanguard Wellesley and Voya Retirement

Assuming the 90 days horizon Vanguard Wellesley is expected to generate 1.65 times less return on investment than Voya Retirement. In addition to that, Vanguard Wellesley is 1.09 times more volatile than Voya Retirement Moderate. It trades about 0.05 of its total potential returns per unit of risk. Voya Retirement Moderate is currently generating about 0.09 per unit of volatility. If you would invest  859.00  in Voya Retirement Moderate on October 9, 2024 and sell it today you would earn a total of  153.00  from holding Voya Retirement Moderate or generate 17.81% return on investment over 90 days.

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

Vanguard Wellesley Income  vs.  Voya Retirement Moderate

Vanguard Wellesley Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Wellesley Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Wellesley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Retirement Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Retirement Moderate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Voya Retirement 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 Wellesley and Voya Retirement

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

The idea behind Vanguard Wellesley Income and Voya Retirement Moderate 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.