Correlation Between Capital World and Voya Global
Can any of the company-specific risk be diversified away by investing in both Capital World and Voya Global 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 Capital World and Voya Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Bond and Voya Global Bond, you can compare the effects of market volatilities on Capital World and Voya Global 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 Capital World with a short position of Voya Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Voya Global.
Diversification Opportunities for Capital World and Voya Global
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Capital and VOYA is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Bond and Voya Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Global Bond and Capital World 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 Capital World Bond are associated (or correlated) with Voya Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Global Bond has no effect on the direction of Capital World i.e., Capital World and Voya Global go up and down completely randomly.
Pair Corralation between Capital World and Voya Global
Assuming the 90 days horizon Capital World is expected to generate 1.16 times less return on investment than Voya Global. But when comparing it to its historical volatility, Capital World Bond is 1.16 times less risky than Voya Global. It trades about 0.06 of its potential returns per unit of risk. Voya Global Bond is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 705.00 in Voya Global Bond on September 1, 2024 and sell it today you would earn a total of 22.00 from holding Voya Global Bond or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Capital World Bond vs. Voya Global Bond
Performance |
| Timeline |
| Capital World Bond |
| Voya Global Bond |
Capital World and Voya Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Voya Global
The main advantage of trading using opposite Capital World and Voya Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Voya Global 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 Global will offset losses from the drop in Voya Global's long position.| Capital World vs. Gmo Resources | Capital World vs. Dreyfus Natural Resources | Capital World vs. Franklin Natural Resources | Capital World vs. Oil Gas Ultrasector |
| Voya Global vs. Voya Bond Index | Voya Global vs. Voya Bond Index | Voya Global vs. Voya Limited Maturity | Voya Global 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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