Correlation Between Small Cap and Voya Real
Can any of the company-specific risk be diversified away by investing in both Small Cap and Voya Real 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 Small Cap and Voya Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Growth and Voya Real Estate, you can compare the effects of market volatilities on Small Cap and Voya Real 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 Small Cap with a short position of Voya Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Voya Real.
Diversification Opportunities for Small Cap and Voya Real
Modest diversification
The 3 months correlation between SMALL and Voya is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth and Voya Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Real Estate and Small Cap 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 Small Cap Growth are associated (or correlated) with Voya Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Real Estate has no effect on the direction of Small Cap i.e., Small Cap and Voya Real go up and down completely randomly.
Pair Corralation between Small Cap and Voya Real
Assuming the 90 days horizon Small Cap Growth is expected to generate 1.01 times more return on investment than Voya Real. However, Small Cap is 1.01 times more volatile than Voya Real Estate. It trades about 0.05 of its potential returns per unit of risk. Voya Real Estate is currently generating about 0.01 per unit of risk. If you would invest 1,551 in Small Cap Growth on November 1, 2024 and sell it today you would earn a total of 439.00 from holding Small Cap Growth or generate 28.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Growth vs. Voya Real Estate
Performance |
| Timeline |
| Small Cap Growth |
| Voya Real Estate |
Small Cap and Voya Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Voya Real
The main advantage of trading using opposite Small Cap and Voya Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Voya Real 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 Real will offset losses from the drop in Voya Real's long position.| Small Cap vs. City National Rochdale | Small Cap vs. Jpmorgan High Yield | Small Cap vs. Payden High Income | Small Cap vs. Tiaa Cref High Yield Fund |
| Voya Real vs. Vy Baron Growth | Voya Real vs. Upright Growth Income | Voya Real vs. Praxis Genesis Growth | Voya Real vs. Small Cap Growth |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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