Correlation Between Voya High and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Voya High and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Voya High and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Dow Jones.
Diversification Opportunities for Voya High and Dow Jones
Poor diversification
The 3 months correlation between Voya and Dow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Voya High i.e., Voya High and Dow Jones go up and down completely randomly.
Pair Corralation between Voya High and Dow Jones
Assuming the 90 days horizon Voya High is expected to generate 5.99 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Voya High Yield is 6.4 times less risky than Dow Jones. It trades about 0.28 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% 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. Dow Jones Industrial
Performance |
| Timeline |
Voya High and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Voya High Yield
Pair trading matchups for Voya High
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Voya High and Dow Jones
The main advantage of trading using opposite Voya High and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya High position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Voya High vs. Voya Bond Index | Voya High vs. Voya Bond Index | Voya High vs. Voya Limited Maturity | Voya High vs. Voya Limited Maturity |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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