Correlation Between Voya Midcap and Large Cap
Can any of the company-specific risk be diversified away by investing in both Voya Midcap and Large 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 Midcap and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Midcap Opportunities and Large Cap Equity, you can compare the effects of market volatilities on Voya Midcap and Large 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 Midcap with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Midcap and Large Cap.
Diversification Opportunities for Voya Midcap and Large Cap
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Voya and Large is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and Large Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Equity and Voya Midcap 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 Midcap Opportunities are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Equity has no effect on the direction of Voya Midcap i.e., Voya Midcap and Large Cap go up and down completely randomly.
Pair Corralation between Voya Midcap and Large Cap
Assuming the 90 days horizon Voya Midcap Opportunities is expected to generate 1.88 times more return on investment than Large Cap. However, Voya Midcap is 1.88 times more volatile than Large Cap Equity. It trades about 0.46 of its potential returns per unit of risk. Large Cap Equity is currently generating about 0.25 per unit of risk. If you would invest 350.00 in Voya Midcap Opportunities on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Voya Midcap Opportunities or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Midcap Opportunities vs. Large Cap Equity
Performance |
| Timeline |
| Voya Midcap Opportunities |
| Large Cap Equity |
Voya Midcap and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Midcap and Large Cap
The main advantage of trading using opposite Voya Midcap and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Midcap position performs unexpectedly, Large 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 Large Cap will offset losses from the drop in Large Cap's long position.| Voya Midcap vs. Touchstone Ultra Short | Voya Midcap vs. Siit Ultra Short | Voya Midcap vs. Federated Ultrashort Bond | Voya Midcap vs. Sterling Capital Short |
| Large Cap vs. Fidelity Select Semiconductors | Large Cap vs. Westwood Largecap Value | Large Cap vs. Russell 2000 2x | Large Cap vs. Federated Hermes Conservative |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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