Correlation Between Voya Global and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both Voya Global and WisdomTree SmallCap 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 Voya Global and WisdomTree SmallCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Global Advantage and WisdomTree SmallCap Quality, you can compare the effects of market volatilities on Voya Global and WisdomTree SmallCap 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 Voya Global with a short position of WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Global and WisdomTree SmallCap.
Diversification Opportunities for Voya Global and WisdomTree SmallCap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Voya and WisdomTree is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Advantage and WisdomTree SmallCap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap and Voya Global 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 Voya Global Advantage are associated (or correlated) with WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of Voya Global i.e., Voya Global and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between Voya Global and WisdomTree SmallCap
Considering the 90-day investment horizon Voya Global is expected to generate 2.51 times less return on investment than WisdomTree SmallCap. But when comparing it to its historical volatility, Voya Global Advantage is 2.86 times less risky than WisdomTree SmallCap. It trades about 0.37 of its potential returns per unit of risk. WisdomTree SmallCap Quality is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,667 in WisdomTree SmallCap Quality on September 2, 2024 and sell it today you would earn a total of 307.00 from holding WisdomTree SmallCap Quality or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Global Advantage vs. WisdomTree SmallCap Quality
Performance |
| Timeline |
| Voya Global Advantage |
| WisdomTree SmallCap |
Voya Global and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Global and WisdomTree SmallCap
The main advantage of trading using opposite Voya Global and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Global position performs unexpectedly, WisdomTree SmallCap 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 WisdomTree SmallCap will offset losses from the drop in WisdomTree SmallCap's long position.| Voya Global vs. Western Asset High | Voya Global vs. Western Asset Global | Voya Global vs. Western Asset High | Voya Global vs. Voya Global Equity |
| WisdomTree SmallCap vs. iShares SP Mid Cap | WisdomTree SmallCap vs. iShares SP Small Cap | WisdomTree SmallCap vs. iShares SP Mid Cap | WisdomTree SmallCap vs. iShares SP 500 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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