Correlation Between Gmo High and Voya Index
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Voya Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Voya Index Solution, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Voya Index.
Diversification Opportunities for Gmo High and Voya Index
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Voya is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution and Gmo High 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 Gmo High Yield 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 Solution has no effect on the direction of Gmo High i.e., Gmo High and Voya Index go up and down completely randomly.
Pair Corralation between Gmo High and Voya Index
Assuming the 90 days horizon Gmo High is expected to generate 1.63 times less return on investment than Voya Index. But when comparing it to its historical volatility, Gmo High Yield is 2.86 times less risky than Voya Index. It trades about 0.15 of its potential returns per unit of risk. Voya Index Solution is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,264 in Voya Index Solution on September 4, 2024 and sell it today you would earn a total of 360.00 from holding Voya Index Solution or generate 28.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Gmo High Yield vs. Voya Index Solution
Performance |
| Timeline |
| Gmo High Yield |
| Voya Index Solution |
Gmo High and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Voya Index
The main advantage of trading using opposite Gmo High and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.The idea behind Gmo High Yield and Voya Index Solution 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 Index vs. Vanguard Financials Index | Voya Index vs. Gabelli Global Financial | Voya Index vs. 1919 Financial Services | Voya Index vs. Prudential Financial Services |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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