Correlation Between Lumia and Voya International
Can any of the company-specific risk be diversified away by investing in both Lumia and Voya International 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 Lumia and Voya International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Voya International Index, you can compare the effects of market volatilities on Lumia and Voya International 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 Lumia with a short position of Voya International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Voya International.
Diversification Opportunities for Lumia and Voya International
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lumia and Voya is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Voya International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya International Index and Lumia 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 Lumia are associated (or correlated) with Voya International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya International Index has no effect on the direction of Lumia i.e., Lumia and Voya International go up and down completely randomly.
Pair Corralation between Lumia and Voya International
Assuming the 90 days trading horizon Lumia is expected to under-perform the Voya International. In addition to that, Lumia is 8.85 times more volatile than Voya International Index. It trades about -0.19 of its total potential returns per unit of risk. Voya International Index is currently generating about 0.17 per unit of volatility. If you would invest 1,098 in Voya International Index on October 20, 2024 and sell it today you would earn a total of 22.00 from holding Voya International Index or generate 2.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 86.36% |
Values | Daily Returns |
Lumia vs. Voya International Index
Performance |
Timeline |
Lumia |
Voya International Index |
Lumia and Voya International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lumia and Voya International
The main advantage of trading using opposite Lumia and Voya International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Voya International 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 Voya International will offset losses from the drop in Voya International's long position.The idea behind Lumia and Voya International Index 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.Voya International vs. Voya Bond Index | Voya International vs. Voya Bond Index | Voya International vs. Voya Limited Maturity | Voya International 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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