Correlation Between Voya Prime and Pimco Rae

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

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

Diversification Opportunities for Voya Prime and Pimco Rae

-0.4

Correlation Coefficient

Voya Prime  Pimco Rae

Very good diversification

The 3 months correlation between Voya and Pimco is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Voya Prime Rate and Pimco Rae Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Fundamental and Voya Prime 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 Prime Rate are associated (or correlated) with Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Fundamental has no effect on the direction of Voya Prime i.e., Voya Prime and Pimco Rae go up and down completely randomly.

Pair Corralation between Voya Prime and Pimco Rae

Assuming the 90 days horizon Voya Prime Rate is expected to generate 0.55 times more return on investment than Pimco Rae. However, Voya Prime Rate is 1.82 times less risky than Pimco Rae. It trades about 0.31 of its potential returns per unit of risk. Pimco Rae Fundamental is currently generating about 0.02 per unit of risk. If you would invest  712.00  in Voya Prime Rate on September 13, 2024 and sell it today you would earn a total of  81.00  from holding Voya Prime Rate or generate 11.38% return on investment over 90 days.

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

Voya Prime Rate  vs.  Pimco Rae Fundamental

Voya Prime Rate

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Prime Rate are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Prime may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pimco Rae Fundamental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Fundamental are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Pimco Rae 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 Prime and Pimco Rae

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

The idea behind Voya Prime Rate and Pimco Rae Fundamental 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.