Correlation Between Microsoft and Voya Retirement

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

Diversification Opportunities for Microsoft and Voya Retirement

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Microsoft and Voya is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voya Retirement Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Retirement Moderate and Microsoft 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 Microsoft are associated (or correlated) with Voya Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Retirement Moderate has no effect on the direction of Microsoft i.e., Microsoft and Voya Retirement go up and down completely randomly.

Pair Corralation between Microsoft and Voya Retirement

Given the investment horizon of 90 days Microsoft is expected to generate 3.38 times more return on investment than Voya Retirement. However, Microsoft is 3.38 times more volatile than Voya Retirement Moderate. It trades about 0.13 of its potential returns per unit of risk. Voya Retirement Moderate is currently generating about 0.09 per unit of risk. If you would invest  41,830  in Microsoft on September 13, 2024 and sell it today you would earn a total of  3,126  from holding Microsoft or generate 7.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Microsoft  vs.  Voya Retirement Moderate

 Performance 
       Timeline  
Microsoft 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Voya Retirement Moderate 

Risk-Adjusted Performance

12 of 100

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

Microsoft and Voya Retirement Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft and Voya Retirement

The main advantage of trading using opposite Microsoft and Voya Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Voya Retirement 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 Retirement will offset losses from the drop in Voya Retirement's long position.
The idea behind Microsoft and Voya Retirement Moderate 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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