Correlation Between Voya Solution and Iaadx

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

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

Diversification Opportunities for Voya Solution and Iaadx

0.8

Correlation Coefficient

Voya Solution  Iaadx

Very poor diversification

The 3 months correlation between Voya and Iaadx is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution Conservative and Iaadx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iaadx and Voya Solution 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 Solution Conservative are associated (or correlated) with Iaadx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iaadx has no effect on the direction of Voya Solution i.e., Voya Solution and Iaadx go up and down completely randomly.

Pair Corralation between Voya Solution and Iaadx

Assuming the 90 days horizon Voya Solution Conservative is expected to generate 1.2 times more return on investment than Iaadx. However, Voya Solution is 1.2 times more volatile than Iaadx. It trades about 0.06 of its potential returns per unit of risk. Iaadx is currently generating about -0.01 per unit of risk. If you would invest  1,026  in Voya Solution Conservative on October 25, 2024 and sell it today you would earn a total of  11.00  from holding Voya Solution Conservative or generate 1.07% return on investment over 90 days.

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

Voya Solution Conservative  vs.  Iaadx

Voya Solution Conser

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Conservative are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Iaadx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iaadx has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Iaadx 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 Solution and Iaadx

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

The idea behind Voya Solution Conservative and Iaadx 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.