Correlation Between Voya High and Conservative Allocation
Can any of the company-specific risk be diversified away by investing in both Voya High and Conservative Allocation 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 Conservative Allocation 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 Conservative Allocation Fund, you can compare the effects of market volatilities on Voya High and Conservative Allocation 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 Conservative Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Conservative Allocation.
Diversification Opportunities for Voya High and Conservative Allocation
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Voya and Conservative is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and Conservative Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conservative Allocation 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 Conservative Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conservative Allocation has no effect on the direction of Voya High i.e., Voya High and Conservative Allocation go up and down completely randomly.
Pair Corralation between Voya High and Conservative Allocation
Assuming the 90 days horizon Voya High Yield is expected to generate 0.48 times more return on investment than Conservative Allocation. However, Voya High Yield is 2.08 times less risky than Conservative Allocation. It trades about 0.19 of its potential returns per unit of risk. Conservative Allocation Fund is currently generating about -0.02 per unit of risk. If you would invest 830.00 in Voya High Yield on October 13, 2024 and sell it today you would earn a total of 42.00 from holding Voya High Yield or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya High Yield vs. Conservative Allocation Fund
Performance |
| Timeline |
| Voya High Yield |
| Conservative Allocation |
Voya High and Conservative Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya High and Conservative Allocation
The main advantage of trading using opposite Voya High and Conservative Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya High position performs unexpectedly, Conservative Allocation 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 Conservative Allocation will offset losses from the drop in Conservative Allocation's 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 |
| Conservative Allocation vs. Voya High Yield | Conservative Allocation vs. Strategic Advisers Income | Conservative Allocation vs. Barings High Yield | Conservative Allocation vs. Calvert 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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