Correlation Between EQT AB and Voya Financial

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Can any of the company-specific risk be diversified away by investing in both EQT AB and Voya Financial 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 EQT AB and Voya Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT AB and Voya Financial, you can compare the effects of market volatilities on EQT AB and Voya Financial 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 EQT AB with a short position of Voya Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT AB and Voya Financial.

Diversification Opportunities for EQT AB and Voya Financial

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between EQT and Voya is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial and EQT AB 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 EQT AB are associated (or correlated) with Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of EQT AB i.e., EQT AB and Voya Financial go up and down completely randomly.

Pair Corralation between EQT AB and Voya Financial

Assuming the 90 days horizon EQT AB is expected to generate 1.57 times more return on investment than Voya Financial. However, EQT AB is 1.57 times more volatile than Voya Financial. It trades about 0.06 of its potential returns per unit of risk. Voya Financial is currently generating about 0.02 per unit of risk. If you would invest  1,513  in EQT AB on September 20, 2024 and sell it today you would earn a total of  1,278  from holding EQT AB or generate 84.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

EQT AB  vs.  Voya Financial

 Performance 
       Timeline  
EQT AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EQT AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EQT AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Voya Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Voya Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Voya Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

EQT AB and Voya Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EQT AB and Voya Financial

The main advantage of trading using opposite EQT AB and Voya Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB position performs unexpectedly, Voya Financial 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 Financial will offset losses from the drop in Voya Financial's long position.
The idea behind EQT AB and Voya Financial 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 Correlations module to find global opportunities by holding instruments from different markets.

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