Correlation Between Bank Of and Voya Financial
Can any of the company-specific risk be diversified away by investing in both Bank Of 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 Bank Of and Voya Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and Voya Financial, you can compare the effects of market volatilities on Bank Of 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 Bank Of with a short position of Voya Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and Voya Financial.
Diversification Opportunities for Bank Of and Voya Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Voya is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial and Bank Of 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 The Bank of 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 Bank Of i.e., Bank Of and Voya Financial go up and down completely randomly.
Pair Corralation between Bank Of and Voya Financial
Assuming the 90 days horizon The Bank of is expected to generate 0.84 times more return on investment than Voya Financial. However, The Bank of is 1.2 times less risky than Voya Financial. It trades about 0.1 of its potential returns per unit of risk. Voya Financial is currently generating about 0.02 per unit of risk. If you would invest 3,960 in The Bank of on September 20, 2024 and sell it today you would earn a total of 3,485 from holding The Bank of or generate 88.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Voya Financial
Performance |
| Timeline |
| The Bank |
| Voya Financial |
Bank Of and Voya Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of and Voya Financial
The main advantage of trading using opposite Bank Of and Voya Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of 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.| Bank Of vs. Chesapeake Utilities | Bank Of vs. Axcelis Technologies | Bank Of vs. SIMS METAL MGT | Bank Of vs. Lion Biotechnologies |
| Voya Financial vs. Charoen Pokphand Foods | Voya Financial vs. CN MODERN DAIRY | Voya Financial vs. INDOFOOD AGRI RES | Voya Financial vs. SIDETRADE EO 1 |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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