Correlation Between Dow Jones and Voya Solution
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Voya Solution 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 Dow Jones and Voya Solution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Voya Solution Income, you can compare the effects of market volatilities on Dow Jones and Voya Solution 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 Dow Jones with a short position of Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Voya Solution.
Diversification Opportunities for Dow Jones and Voya Solution
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Voya is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Voya Solution Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Income and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution Income has no effect on the direction of Dow Jones i.e., Dow Jones and Voya Solution go up and down completely randomly.
Pair Corralation between Dow Jones and Voya Solution
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Voya Solution. In addition to that, Dow Jones is 2.27 times more volatile than Voya Solution Income. It trades about -0.22 of its total potential returns per unit of risk. Voya Solution Income is currently generating about 0.17 per unit of volatility. If you would invest 1,069 in Voya Solution Income on November 27, 2024 and sell it today you would earn a total of 10.00 from holding Voya Solution Income or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Voya Solution Income
Performance |
| Timeline |
Dow Jones and Voya Solution Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Voya Solution Income
Pair trading matchups for Voya Solution
Pair Trading with Dow Jones and Voya Solution
The main advantage of trading using opposite Dow Jones and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Voya Solution 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 Solution will offset losses from the drop in Voya Solution's long position.The idea behind Dow Jones Industrial and Voya Solution Income 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.| Voya Solution vs. Jpmorgan Diversified Fund | Voya Solution vs. Fidelity Advisor Diversified | Voya Solution vs. Elfun Diversified Fund | Voya Solution vs. Blackrock Diversified Fixed |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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