Correlation Between Morningstar Municipal and Voya Floating
Can any of the company-specific risk be diversified away by investing in both Morningstar Municipal and Voya Floating 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 Morningstar Municipal and Voya Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morningstar Municipal Bond and Voya Floating Rate, you can compare the effects of market volatilities on Morningstar Municipal and Voya Floating 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 Morningstar Municipal with a short position of Voya Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Municipal and Voya Floating.
Diversification Opportunities for Morningstar Municipal and Voya Floating
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Morningstar and Voya is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Municipal Bond and Voya Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Floating Rate and Morningstar Municipal 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 Morningstar Municipal Bond are associated (or correlated) with Voya Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Floating Rate has no effect on the direction of Morningstar Municipal i.e., Morningstar Municipal and Voya Floating go up and down completely randomly.
Pair Corralation between Morningstar Municipal and Voya Floating
Assuming the 90 days horizon Morningstar Municipal is expected to generate 1.58 times less return on investment than Voya Floating. But when comparing it to its historical volatility, Morningstar Municipal Bond is 1.2 times less risky than Voya Floating. It trades about 0.13 of its potential returns per unit of risk. Voya Floating Rate is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 726.00 in Voya Floating Rate on September 12, 2024 and sell it today you would earn a total of 90.00 from holding Voya Floating Rate or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morningstar Municipal Bond vs. Voya Floating Rate
Performance |
| Timeline |
| Morningstar Municipal |
| Voya Floating Rate |
Morningstar Municipal and Voya Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morningstar Municipal and Voya Floating
The main advantage of trading using opposite Morningstar Municipal and Voya Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Municipal position performs unexpectedly, Voya Floating 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 Floating will offset losses from the drop in Voya Floating's long position.The idea behind Morningstar Municipal Bond and Voya Floating Rate 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 Floating vs. Transamerica Intermediate Muni | Voya Floating vs. Blrc Sgy Mnp | Voya Floating vs. Baird Strategic Municipal | Voya Floating vs. Morningstar Municipal Bond |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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