Correlation Between GM and Voya Solution
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Voya Solution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Voya Solution Income, you can compare the effects of market volatilities on GM 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 GM with a short position of Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Voya Solution.
Diversification Opportunities for GM and Voya Solution
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Voya is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Voya Solution go up and down completely randomly.
Pair Corralation between GM and Voya Solution
Allowing for the 90-day total investment horizon General Motors is expected to generate 9.79 times more return on investment than Voya Solution. However, GM is 9.79 times more volatile than Voya Solution Income. It trades about 0.17 of its potential returns per unit of risk. Voya Solution Income is currently generating about 0.27 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Voya Solution Income
Performance |
| Timeline |
| General Motors |
| Voya Solution Income |
GM and Voya Solution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Voya Solution
The main advantage of trading using opposite GM and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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. Voya Bond Index | Voya Solution vs. Voya Bond Index | Voya Solution vs. Voya Limited Maturity | Voya Solution vs. Voya Limited Maturity |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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