Correlation Between Voya Retirement and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Voya Retirement and Old Westbury 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 Retirement and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Retirement Moderate and Old Westbury Large, you can compare the effects of market volatilities on Voya Retirement and Old Westbury 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 Retirement with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Retirement and Old Westbury.
Diversification Opportunities for Voya Retirement and Old Westbury
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Old is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Voya Retirement Moderate and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Voya Retirement 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 Retirement Moderate are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Voya Retirement i.e., Voya Retirement and Old Westbury go up and down completely randomly.
Pair Corralation between Voya Retirement and Old Westbury
Assuming the 90 days horizon Voya Retirement is expected to generate 1.74 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Voya Retirement Moderate is 1.89 times less risky than Old Westbury. It trades about 0.08 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,015 in Old Westbury Large on November 5, 2024 and sell it today you would earn a total of 24.00 from holding Old Westbury Large or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Retirement Moderate vs. Old Westbury Large
Performance |
| Timeline |
| Voya Retirement Moderate |
| Old Westbury Large |
Voya Retirement and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Retirement and Old Westbury
The main advantage of trading using opposite Voya Retirement and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Retirement position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Voya Retirement vs. Calvert Conservative Allocation | Voya Retirement vs. Lord Abbett Diversified | Voya Retirement vs. Federated Hermes Conservative | Voya Retirement vs. Aqr Diversified Arbitrage |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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