Correlation Between Morningstar Aggressive and Voya International
Can any of the company-specific risk be diversified away by investing in both Morningstar Aggressive and Voya International 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 International 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 International Index, you can compare the effects of market volatilities on Morningstar Aggressive and Voya International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Aggressive and Voya International.
Diversification Opportunities for Morningstar Aggressive and Voya International
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morningstar and Voya is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Aggressive Growth and Voya International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya International Index 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya International Index has no effect on the direction of Morningstar Aggressive i.e., Morningstar Aggressive and Voya International go up and down completely randomly.
Pair Corralation between Morningstar Aggressive and Voya International
Assuming the 90 days horizon Morningstar Aggressive Growth is expected to generate 0.74 times more return on investment than Voya International. However, Morningstar Aggressive Growth is 1.36 times less risky than Voya International. It trades about 0.15 of its potential returns per unit of risk. Voya International Index is currently generating about -0.06 per unit of risk. If you would invest 1,537 in Morningstar Aggressive Growth on September 2, 2024 and sell it today you would earn a total of 95.00 from holding Morningstar Aggressive Growth or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morningstar Aggressive Growth vs. Voya International Index
Performance |
| Timeline |
| Morningstar Aggressive |
| Voya International Index |
Morningstar Aggressive and Voya International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morningstar Aggressive and Voya International
The main advantage of trading using opposite Morningstar Aggressive and Voya International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Aggressive position performs unexpectedly, Voya International 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 International will offset losses from the drop in Voya International's long position.The idea behind Morningstar Aggressive Growth and Voya International Index 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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