Correlation Between American Funds and Voya Large-cap
Can any of the company-specific risk be diversified away by investing in both American Funds and Voya Large-cap 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 American Funds and Voya Large-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Voya Large Cap Growth, you can compare the effects of market volatilities on American Funds and Voya Large-cap 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 American Funds with a short position of Voya Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Voya Large-cap.
Diversification Opportunities for American Funds and Voya Large-cap
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Voya is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Voya Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap and American Funds 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 American Funds The are associated (or correlated) with Voya Large-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of American Funds i.e., American Funds and Voya Large-cap go up and down completely randomly.
Pair Corralation between American Funds and Voya Large-cap
Assuming the 90 days horizon American Funds The is expected to generate 0.94 times more return on investment than Voya Large-cap. However, American Funds The is 1.07 times less risky than Voya Large-cap. It trades about 0.03 of its potential returns per unit of risk. Voya Large Cap Growth is currently generating about 0.02 per unit of risk. If you would invest 6,852 in American Funds The on December 5, 2024 and sell it today you would earn a total of 511.00 from holding American Funds The or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Funds The vs. Voya Large Cap Growth
Performance |
| Timeline |
| American Funds |
| Voya Large Cap |
American Funds and Voya Large-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Voya Large-cap
The main advantage of trading using opposite American Funds and Voya Large-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Voya Large-cap 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 Large-cap will offset losses from the drop in Voya Large-cap's long position.| American Funds vs. T Rowe Price | ||
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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