Correlation Between Adams Diversified and Voya Large

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

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

Diversification Opportunities for Adams Diversified and Voya Large

0.97

Correlation Coefficient

Adams Diversified  Voya Large

Almost no diversification

The 3 months correlation between Adams and Voya is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Voya Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap and Adams Diversified 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 Adams Diversified Equity are associated (or correlated) with Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Adams Diversified i.e., Adams Diversified and Voya Large go up and down completely randomly.

Pair Corralation between Adams Diversified and Voya Large

Assuming the 90 days horizon Adams Diversified Equity is expected to generate 0.71 times more return on investment than Voya Large. However, Adams Diversified Equity is 1.41 times less risky than Voya Large. It trades about -0.1 of its potential returns per unit of risk. Voya Large Cap is currently generating about -0.11 per unit of risk. If you would invest  2,282  in Adams Diversified Equity on December 20, 2024 and sell it today you would lose (152.00) from holding Adams Diversified Equity or give up 6.66% of portfolio value over 90 days.

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

Adams Diversified Equity  vs.  Voya Large Cap

Adams Diversified Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adams Diversified Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Voya Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Adams Diversified and Voya Large

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

The idea behind Adams Diversified Equity and Voya Large Cap 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.