Correlation Between Voya High and Vy(r) T
Can any of the company-specific risk be diversified away by investing in both Voya High and Vy(r) T 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 Vy(r) T 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 Vy T Rowe, you can compare the effects of market volatilities on Voya High and Vy(r) T 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 Vy(r) T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Vy(r) T.
Diversification Opportunities for Voya High and Vy(r) T
Poor diversification
The 3 months correlation between Voya and Vy(r) is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and Vy T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy T Rowe 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 Vy(r) T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy T Rowe has no effect on the direction of Voya High i.e., Voya High and Vy(r) T go up and down completely randomly.
Pair Corralation between Voya High and Vy(r) T
Assuming the 90 days horizon Voya High is expected to generate 5.51 times less return on investment than Vy(r) T. But when comparing it to its historical volatility, Voya High Yield is 7.31 times less risky than Vy(r) T. It trades about 0.2 of its potential returns per unit of risk. Vy T Rowe is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 9,578 in Vy T Rowe on August 29, 2024 and sell it today you would earn a total of 357.00 from holding Vy T Rowe or generate 3.73% 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. Vy T Rowe
Performance |
| Timeline |
| Voya High Yield |
| Vy T Rowe |
Voya High and Vy(r) T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya High and Vy(r) T
The main advantage of trading using opposite Voya High and Vy(r) T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya High position performs unexpectedly, Vy(r) T 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 Vy(r) T will offset losses from the drop in Vy(r) T'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 |
| Vy(r) T vs. Voya Bond Index | Vy(r) T vs. Voya Bond Index | Vy(r) T vs. Voya Limited Maturity | Vy(r) T vs. Voya Limited Maturity |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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