Correlation Between Western Asset and Voya Global

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

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

Diversification Opportunities for Western Asset and Voya Global

0.6

Correlation Coefficient

Western Asset  Voya Global

Poor diversification

The 3 months correlation between Western and Voya is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Voya Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Global Equity and Western Asset 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 Western Asset Diversified are associated (or correlated) with Voya Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Global Equity has no effect on the direction of Western Asset i.e., Western Asset and Voya Global go up and down completely randomly.

Pair Corralation between Western Asset and Voya Global

Considering the 90-day investment horizon Western Asset Diversified is expected to generate 0.78 times more return on investment than Voya Global. However, Western Asset Diversified is 1.28 times less risky than Voya Global. It trades about 0.17 of its potential returns per unit of risk. Voya Global Equity is currently generating about 0.02 per unit of risk. If you would invest  1,427  in Western Asset Diversified on November 19, 2024 and sell it today you would earn a total of  93.00  from holding Western Asset Diversified or generate 6.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Western Asset Diversified  vs.  Voya Global Equity

Western Asset Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Diversified are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Western Asset may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Voya Global Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Voya Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Asset and Voya Global

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

The idea behind Western Asset Diversified and Voya Global Equity 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.