Correlation Between Voya Bond and Voya Vacs
Can any of the company-specific risk be diversified away by investing in both Voya Bond and Voya Vacs 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 Bond and Voya Vacs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Bond Index and Voya Vacs Index, you can compare the effects of market volatilities on Voya Bond and Voya Vacs 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 Bond with a short position of Voya Vacs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Bond and Voya Vacs.
Diversification Opportunities for Voya Bond and Voya Vacs
Pay attention - limited upside
The 3 months correlation between Voya and Voya is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Voya Bond Index and Voya Vacs Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Vacs Index and Voya Bond 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 Bond Index are associated (or correlated) with Voya Vacs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Vacs Index has no effect on the direction of Voya Bond i.e., Voya Bond and Voya Vacs go up and down completely randomly.
Pair Corralation between Voya Bond and Voya Vacs
Assuming the 90 days horizon Voya Bond is expected to generate 8.98 times less return on investment than Voya Vacs. But when comparing it to its historical volatility, Voya Bond Index is 1.92 times less risky than Voya Vacs. It trades about 0.03 of its potential returns per unit of risk. Voya Vacs Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 986.00 in Voya Vacs Index on September 1, 2024 and sell it today you would earn a total of 508.00 from holding Voya Vacs Index or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Bond Index vs. Voya Vacs Index
Performance |
| Timeline |
| Voya Bond Index |
| Voya Vacs Index |
Voya Bond and Voya Vacs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Bond and Voya Vacs
The main advantage of trading using opposite Voya Bond and Voya Vacs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Bond position performs unexpectedly, Voya Vacs 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 Vacs will offset losses from the drop in Voya Vacs' long position.| Voya Bond vs. Voya Bond Index | Voya Bond vs. Voya Bond Index | Voya Bond vs. Voya Limited Maturity | Voya Bond vs. Voya Limited Maturity |
| Voya Vacs vs. Virtus Seix Government | Voya Vacs vs. Inverse Government Long | Voya Vacs vs. Dreyfus Government Cash | Voya Vacs vs. Aig Government Money |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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