Correlation Between Microsoft and Voya Index
Can any of the company-specific risk be diversified away by investing in both Microsoft and Voya Index 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 Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Voya Index Solution, you can compare the effects of market volatilities on Microsoft and Voya Index 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 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Voya Index.
Diversification Opportunities for Microsoft and Voya Index
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Voya is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution 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 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Microsoft i.e., Microsoft and Voya Index go up and down completely randomly.
Pair Corralation between Microsoft and Voya Index
Given the investment horizon of 90 days Microsoft is expected to generate 1.42 times less return on investment than Voya Index. In addition to that, Microsoft is 2.17 times more volatile than Voya Index Solution. It trades about 0.04 of its total potential returns per unit of risk. Voya Index Solution is currently generating about 0.12 per unit of volatility. If you would invest 1,006 in Voya Index Solution on August 26, 2024 and sell it today you would earn a total of 186.00 from holding Voya Index Solution or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Voya Index Solution
Performance |
| Timeline |
| Microsoft |
| Voya Index Solution |
Microsoft and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Voya Index
The main advantage of trading using opposite Microsoft and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Voya Index 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 Index will offset losses from the drop in Voya Index's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Voya Index vs. Voya Bond Index | Voya Index vs. Voya Bond Index | Voya Index vs. Voya Limited Maturity | Voya Index 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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