Correlation Between Voya Solution and Balanced Fund

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Can any of the company-specific risk be diversified away by investing in both Voya Solution and Balanced Fund 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 Solution and Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Solution 2045 and Balanced Fund Investor, you can compare the effects of market volatilities on Voya Solution and Balanced Fund 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 Solution with a short position of Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Solution and Balanced Fund.

Diversification Opportunities for Voya Solution and Balanced Fund

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Voya and Balanced is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution 2045 and Balanced Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Investor and Voya Solution 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 Solution 2045 are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Investor has no effect on the direction of Voya Solution i.e., Voya Solution and Balanced Fund go up and down completely randomly.

Pair Corralation between Voya Solution and Balanced Fund

Assuming the 90 days horizon Voya Solution 2045 is expected to generate 1.21 times more return on investment than Balanced Fund. However, Voya Solution is 1.21 times more volatile than Balanced Fund Investor. It trades about 0.35 of its potential returns per unit of risk. Balanced Fund Investor is currently generating about 0.39 per unit of risk. If you would invest  1,000.00  in Voya Solution 2045 on September 5, 2024 and sell it today you would earn a total of  40.00  from holding Voya Solution 2045 or generate 4.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Voya Solution 2045  vs.  Balanced Fund Investor

 Performance 
       Timeline  
Voya Solution 2045 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution 2045 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Balanced Fund Investor 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Solution and Balanced Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Voya Solution and Balanced Fund

The main advantage of trading using opposite Voya Solution and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Solution position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.
The idea behind Voya Solution 2045 and Balanced Fund Investor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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