Correlation Between Voya Prime and Deutsche Gold

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

Diversification Opportunities for Voya Prime and Deutsche Gold

0.71

Correlation Coefficient

Voya Prime  Deutsche Gold

Poor diversification

The 3 months correlation between Voya and Deutsche is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Voya Prime Rate and Deutsche Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Gold Precious 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 Deutsche Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Gold Precious has no effect on the direction of Voya Prime i.e., Voya Prime and Deutsche Gold go up and down completely randomly.

Pair Corralation between Voya Prime and Deutsche Gold

Assuming the 90 days horizon Voya Prime is expected to generate 6.46 times less return on investment than Deutsche Gold. But when comparing it to its historical volatility, Voya Prime Rate is 2.24 times less risky than Deutsche Gold. It trades about 0.08 of its potential returns per unit of risk. Deutsche Gold Precious is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,237  in Deutsche Gold Precious on December 21, 2024 and sell it today you would earn a total of  1,305  from holding Deutsche Gold Precious or generate 24.92% return on investment over 90 days.

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

Voya Prime Rate  vs.  Deutsche Gold Precious

Voya Prime Rate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Prime Rate are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Prime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Deutsche Gold Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Gold Precious are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Deutsche Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Voya Prime and Deutsche Gold

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

The idea behind Voya Prime Rate and Deutsche Gold Precious 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.