Correlation Between World Energy and Voya Index
Can any of the company-specific risk be diversified away by investing in both World Energy and Voya Index 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 World Energy and Voya Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Voya Index Plus, you can compare the effects of market volatilities on World Energy and Voya Index 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 World Energy with a short position of Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Voya Index.
Diversification Opportunities for World Energy and Voya Index
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between World and Voya is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Voya Index Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Plus and World Energy 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 World Energy Fund are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Plus has no effect on the direction of World Energy i.e., World Energy and Voya Index go up and down completely randomly.
Pair Corralation between World Energy and Voya Index
Assuming the 90 days horizon World Energy is expected to generate 1.29 times less return on investment than Voya Index. But when comparing it to its historical volatility, World Energy Fund is 1.12 times less risky than Voya Index. It trades about 0.04 of its potential returns per unit of risk. Voya Index Plus is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,982 in Voya Index Plus on September 12, 2024 and sell it today you would earn a total of 446.00 from holding Voya Index Plus or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Voya Index Plus
Performance |
| Timeline |
| World Energy |
| Voya Index Plus |
World Energy and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Voya Index
The main advantage of trading using opposite World Energy and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Voya Index 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 Index will offset losses from the drop in Voya Index's long position.| World Energy vs. Aam Select Income | World Energy vs. Arrow Managed Futures | World Energy vs. Rbc Microcap Value | World Energy vs. Volumetric Fund Volumetric |
| Voya Index vs. Goehring Rozencwajg Resources | Voya Index vs. Oil Gas Ultrasector | Voya Index vs. Fidelity Advisor Energy | Voya Index vs. World Energy Fund |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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