Correlation Between Financials Ultrasector and Voya High
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector and Voya High 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 Financials Ultrasector and Voya High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and Voya High Yield, you can compare the effects of market volatilities on Financials Ultrasector and Voya High 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 Financials Ultrasector with a short position of Voya High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Voya High.
Diversification Opportunities for Financials Ultrasector and Voya High
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Financials and Voya is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Voya High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya High Yield and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Voya High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya High Yield has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Voya High go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Voya High
Assuming the 90 days horizon Financials Ultrasector Profund is expected to under-perform the Voya High. In addition to that, Financials Ultrasector is 6.77 times more volatile than Voya High Yield. It trades about -0.37 of its total potential returns per unit of risk. Voya High Yield is currently generating about -0.19 per unit of volatility. If you would invest 697.00 in Voya High Yield on September 23, 2024 and sell it today you would lose (5.00) from holding Voya High Yield or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Voya High Yield
Performance |
| Timeline |
| Financials Ultrasector |
| Voya High Yield |
Financials Ultrasector and Voya High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Voya High
The main advantage of trading using opposite Financials Ultrasector and Voya High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector position performs unexpectedly, Voya High 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 High will offset losses from the drop in Voya High's long position.| Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Ultrashort Mid Cap Profund | Financials Ultrasector vs. Ultrashort Mid Cap Profund |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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