Correlation Between Voya Index and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Voya Index and Multisector Bond 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 Multisector Bond 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 Multisector Bond Sma, you can compare the effects of market volatilities on Voya Index and Multisector Bond 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 Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Index and Multisector Bond.
Diversification Opportunities for Voya Index and Multisector Bond
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Voya and Multisector is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma 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 Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Voya Index i.e., Voya Index and Multisector Bond go up and down completely randomly.
Pair Corralation between Voya Index and Multisector Bond
Assuming the 90 days horizon Voya Index Solution is expected to generate 1.66 times more return on investment than Multisector Bond. However, Voya Index is 1.66 times more volatile than Multisector Bond Sma. It trades about 0.06 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.09 per unit of risk. If you would invest 1,106 in Voya Index Solution on September 4, 2024 and sell it today you would earn a total of 287.00 from holding Voya Index Solution or generate 25.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Index Solution vs. Multisector Bond Sma
Performance |
| Timeline |
| Voya Index Solution |
| Multisector Bond Sma |
Voya Index and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Index and Multisector Bond
The main advantage of trading using opposite Voya Index and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Index position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond's long position.| Voya Index vs. Voya Bond Index | Voya Index vs. Voya Bond Index | Voya Index vs. Voya Limited Maturity | Voya Index vs. Voya Limited Maturity |
| Multisector Bond vs. The National Tax Free | Multisector Bond vs. Artisan High Income | Multisector Bond vs. Versatile Bond Portfolio | Multisector Bond vs. Touchstone Premium 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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