Correlation Between Nasdaq and Voya Financial
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Voya Financial 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 Nasdaq and Voya Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Voya Financial, you can compare the effects of market volatilities on Nasdaq and Voya Financial 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 Nasdaq with a short position of Voya Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Voya Financial.
Diversification Opportunities for Nasdaq and Voya Financial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Voya is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of Nasdaq i.e., Nasdaq and Voya Financial go up and down completely randomly.
Pair Corralation between Nasdaq and Voya Financial
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.68 times more return on investment than Voya Financial. However, Nasdaq Inc is 1.48 times less risky than Voya Financial. It trades about 0.11 of its potential returns per unit of risk. Voya Financial is currently generating about 0.01 per unit of risk. If you would invest 5,683 in Nasdaq Inc on September 20, 2024 and sell it today you would earn a total of 2,064 from holding Nasdaq Inc or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Nasdaq Inc vs. Voya Financial
Performance |
| Timeline |
| Nasdaq Inc |
| Voya Financial |
Nasdaq and Voya Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Voya Financial
The main advantage of trading using opposite Nasdaq and Voya Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Voya Financial 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 Financial will offset losses from the drop in Voya Financial's long position.The idea behind Nasdaq Inc and Voya Financial 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 Financial vs. Ebro Foods SA | Voya Financial vs. TYSON FOODS A | Voya Financial vs. PARKEN Sport Entertainment | Voya Financial vs. Kaiser Aluminum |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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