Correlation Between Scharf Global and Voya Floating

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

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

Diversification Opportunities for Scharf Global and Voya Floating

0.26

Correlation Coefficient

Scharf Global  Voya Floating

Modest diversification

The 3 months correlation between Scharf and Voya is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Voya Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Floating Rate and Scharf Global 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 Scharf Global Opportunity are associated (or correlated) with Voya Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Floating Rate has no effect on the direction of Scharf Global i.e., Scharf Global and Voya Floating go up and down completely randomly.

Pair Corralation between Scharf Global and Voya Floating

Assuming the 90 days horizon Scharf Global Opportunity is expected to generate 3.03 times more return on investment than Voya Floating. However, Scharf Global is 3.03 times more volatile than Voya Floating Rate. It trades about 0.06 of its potential returns per unit of risk. Voya Floating Rate is currently generating about 0.14 per unit of risk. If you would invest  2,976  in Scharf Global Opportunity on October 21, 2024 and sell it today you would earn a total of  585.00  from holding Scharf Global Opportunity or generate 19.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	13.87%
Values	Daily Returns

Scharf Global Opportunity  vs.  Voya Floating Rate

Scharf Global Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Scharf Global and Voya Floating

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

The idea behind Scharf Global Opportunity and Voya Floating Rate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.