Correlation Between Voya High and International Smaller
Can any of the company-specific risk be diversified away by investing in both Voya High and International Smaller 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 International Smaller 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 The International Smaller, you can compare the effects of market volatilities on Voya High and International Smaller 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 International Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and International Smaller.
Diversification Opportunities for Voya High and International Smaller
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Voya and International is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and The International Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The International Smaller 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 International Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The International Smaller has no effect on the direction of Voya High i.e., Voya High and International Smaller go up and down completely randomly.
Pair Corralation between Voya High and International Smaller
Assuming the 90 days horizon Voya High is expected to generate 8.94 times less return on investment than International Smaller. But when comparing it to its historical volatility, Voya High Yield is 6.16 times less risky than International Smaller. It trades about 0.17 of its potential returns per unit of risk. The International Smaller is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,235 in The International Smaller on November 4, 2024 and sell it today you would earn a total of 67.00 from holding The International Smaller or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Voya High Yield vs. The International Smaller
Performance |
| Timeline |
| Voya High Yield |
| The International Smaller |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Voya High and International Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya High and International Smaller
The main advantage of trading using opposite Voya High and International Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya High position performs unexpectedly, International Smaller 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 International Smaller will offset losses from the drop in International Smaller's long position.| Voya High vs. Transamerica Intermediate Muni | Voya High vs. Morningstar Municipal Bond | Voya High vs. Baird Quality Intermediate | Voya High vs. Jpmorgan Ultra Short Municipal |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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