Correlation Between Morningstar Aggressive and Voya High
Can any of the company-specific risk be diversified away by investing in both Morningstar Aggressive and Voya High 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 Morningstar Aggressive and Voya High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morningstar Aggressive Growth and Voya High Yield, you can compare the effects of market volatilities on Morningstar Aggressive and Voya High 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 Morningstar Aggressive with a short position of Voya High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Aggressive and Voya High.
Diversification Opportunities for Morningstar Aggressive and Voya High
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morningstar and Voya is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Aggressive Growth and Voya High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya High Yield and Morningstar Aggressive 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 Morningstar Aggressive Growth are associated (or correlated) with Voya High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya High Yield has no effect on the direction of Morningstar Aggressive i.e., Morningstar Aggressive and Voya High go up and down completely randomly.
Pair Corralation between Morningstar Aggressive and Voya High
Assuming the 90 days horizon Morningstar Aggressive Growth is expected to generate 2.45 times more return on investment than Voya High. However, Morningstar Aggressive is 2.45 times more volatile than Voya High Yield. It trades about 0.09 of its potential returns per unit of risk. Voya High Yield is currently generating about 0.09 per unit of risk. If you would invest 1,203 in Morningstar Aggressive Growth on September 2, 2024 and sell it today you would earn a total of 429.00 from holding Morningstar Aggressive Growth or generate 35.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morningstar Aggressive Growth vs. Voya High Yield
Performance |
| Timeline |
| Morningstar Aggressive |
| Voya High Yield |
Morningstar Aggressive and Voya High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morningstar Aggressive and Voya High
The main advantage of trading using opposite Morningstar Aggressive and Voya High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Aggressive position performs unexpectedly, Voya High 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 High will offset losses from the drop in Voya High's long position.The idea behind Morningstar Aggressive Growth and Voya High Yield 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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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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