Correlation Between Voya Index and Commonwealth Global
Can any of the company-specific risk be diversified away by investing in both Voya Index and Commonwealth Global 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 Index and Commonwealth Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Index Solution and Commonwealth Global Fund, you can compare the effects of market volatilities on Voya Index and Commonwealth Global 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 Index with a short position of Commonwealth Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Index and Commonwealth Global.
Diversification Opportunities for Voya Index and Commonwealth Global
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Commonwealth is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution and Commonwealth Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Global and Voya Index 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 Index Solution are associated (or correlated) with Commonwealth Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Global has no effect on the direction of Voya Index i.e., Voya Index and Commonwealth Global go up and down completely randomly.
Pair Corralation between Voya Index and Commonwealth Global
Assuming the 90 days horizon Voya Index is expected to generate 1.38 times less return on investment than Commonwealth Global. But when comparing it to its historical volatility, Voya Index Solution is 1.53 times less risky than Commonwealth Global. It trades about 0.28 of its potential returns per unit of risk. Commonwealth Global Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,092 in Commonwealth Global Fund on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Commonwealth Global Fund or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Index Solution vs. Commonwealth Global Fund
Performance |
| Timeline |
| Voya Index Solution |
| Commonwealth Global |
Voya Index and Commonwealth Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Index and Commonwealth Global
The main advantage of trading using opposite Voya Index and Commonwealth Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Index position performs unexpectedly, Commonwealth Global 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 Commonwealth Global will offset losses from the drop in Commonwealth Global's long position.| Voya Index vs. Commonwealth Global Fund | Voya Index vs. Small Cap Stock | Voya Index vs. Artisan Thematic Fund | Voya Index vs. Eic Value Fund |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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