Correlation Between Voya Global and Small Cap
Can any of the company-specific risk be diversified away by investing in both Voya Global and Small 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 Voya Global and Small Cap 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 Small Cap Premium, you can compare the effects of market volatilities on Voya Global and Small 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 Voya Global with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Global and Small Cap.
Diversification Opportunities for Voya Global and Small Cap
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Small is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Advantage and Small Cap Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Premium 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Premium has no effect on the direction of Voya Global i.e., Voya Global and Small Cap go up and down completely randomly.
Pair Corralation between Voya Global and Small Cap
Considering the 90-day investment horizon Voya Global Advantage is expected to generate 0.92 times more return on investment than Small Cap. However, Voya Global Advantage is 1.09 times less risky than Small Cap. It trades about 0.3 of its potential returns per unit of risk. Small Cap Premium is currently generating about 0.04 per unit of risk. If you would invest 933.00 in Voya Global Advantage on August 29, 2024 and sell it today you would earn a total of 36.00 from holding Voya Global Advantage or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Global Advantage vs. Small Cap Premium
Performance |
| Timeline |
| Voya Global Advantage |
| Small Cap Premium |
Voya Global and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Global and Small Cap
The main advantage of trading using opposite Voya Global and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Global position performs unexpectedly, Small 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 Small Cap will offset losses from the drop in Small Cap'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 |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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