Correlation Between Voya High and Deutsche Small
Can any of the company-specific risk be diversified away by investing in both Voya High and Deutsche Small 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 High and Deutsche Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya High Yield and Deutsche Small Cap, you can compare the effects of market volatilities on Voya High and Deutsche Small 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 High with a short position of Deutsche Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Deutsche Small.
Diversification Opportunities for Voya High and Deutsche Small
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Deutsche is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and Deutsche Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Small Cap and Voya High 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 High Yield are associated (or correlated) with Deutsche Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Small Cap has no effect on the direction of Voya High i.e., Voya High and Deutsche Small go up and down completely randomly.
Pair Corralation between Voya High and Deutsche Small
Assuming the 90 days horizon Voya High is expected to generate 2.11 times less return on investment than Deutsche Small. But when comparing it to its historical volatility, Voya High Yield is 5.63 times less risky than Deutsche Small. It trades about 0.15 of its potential returns per unit of risk. Deutsche Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,295 in Deutsche Small Cap on September 12, 2024 and sell it today you would earn a total of 513.00 from holding Deutsche Small Cap or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya High Yield vs. Deutsche Small Cap
Performance |
| Timeline |
| Voya High Yield |
| Deutsche Small Cap |
Voya High and Deutsche Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya High and Deutsche Small
The main advantage of trading using opposite Voya High and Deutsche Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya High position performs unexpectedly, Deutsche Small 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 Deutsche Small will offset losses from the drop in Deutsche Small's long position.| Voya High vs. SCOR PK | Voya High vs. Morningstar Unconstrained Allocation | Voya High vs. Via Renewables | Voya High vs. Bondbloxx ETF Trust |
| Deutsche Small vs. City National Rochdale | Deutsche Small vs. Blackrock High Yield | Deutsche Small vs. Payden High Income | Deutsche Small vs. Voya High Yield |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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