Correlation Between Voya Solution and Columbia Convertible

Can any of the company-specific risk be diversified away by investing in both Voya Solution and Columbia Convertible 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 Columbia Convertible 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 Columbia Convertible Securities, you can compare the effects of market volatilities on Voya Solution and Columbia Convertible 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 Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Solution and Columbia Convertible.

Diversification Opportunities for Voya Solution and Columbia Convertible

0.76

Correlation Coefficient

Voya Solution  Columbia Convertible

Poor diversification

The 3 months correlation between Voya and Columbia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution Conservative and Columbia Convertible Securitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible 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 Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Voya Solution i.e., Voya Solution and Columbia Convertible go up and down completely randomly.

Pair Corralation between Voya Solution and Columbia Convertible

Assuming the 90 days horizon Voya Solution is expected to generate 3.39 times less return on investment than Columbia Convertible. But when comparing it to its historical volatility, Voya Solution Conservative is 2.26 times less risky than Columbia Convertible. It trades about 0.12 of its potential returns per unit of risk. Columbia Convertible Securities is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,212  in Columbia Convertible Securities on October 26, 2024 and sell it today you would earn a total of  51.00  from holding Columbia Convertible Securities or generate 2.31% return on investment over 90 days.

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

Voya Solution Conservative  vs.  Columbia Convertible Securitie

Voya Solution Conser

Risk-Adjusted Performance

5 of 100

Modest

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.

Columbia Convertible

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Convertible Securities are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Columbia Convertible 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 Columbia Convertible

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

The idea behind Voya Solution Conservative and Columbia Convertible Securities 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..