Correlation Between Biotechnology Fund and Voya Government
Can any of the company-specific risk be diversified away by investing in both Biotechnology Fund and Voya Government 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 Biotechnology Fund and Voya Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotechnology Fund Class and Voya Government Money, you can compare the effects of market volatilities on Biotechnology Fund and Voya Government 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 Biotechnology Fund with a short position of Voya Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Fund and Voya Government.
Diversification Opportunities for Biotechnology Fund and Voya Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BIOTECHNOLOGY and Voya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class and Voya Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Government Money and Biotechnology Fund 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 Biotechnology Fund Class are associated (or correlated) with Voya Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Government Money has no effect on the direction of Biotechnology Fund i.e., Biotechnology Fund and Voya Government go up and down completely randomly.
Pair Corralation between Biotechnology Fund and Voya Government
Assuming the 90 days horizon Biotechnology Fund Class is expected to under-perform the Voya Government. But the mutual fund apears to be less risky and, when comparing its historical volatility, Biotechnology Fund Class is 10.27 times less risky than Voya Government. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Voya Government Money is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Voya Government Money on October 13, 2024 and sell it today you would earn a total of 8.00 from holding Voya Government Money or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Biotechnology Fund Class vs. Voya Government Money
Performance |
| Timeline |
| Biotechnology Fund Class |
| Voya Government Money |
Biotechnology Fund and Voya Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotechnology Fund and Voya Government
The main advantage of trading using opposite Biotechnology Fund and Voya Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotechnology Fund position performs unexpectedly, Voya Government 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 Government will offset losses from the drop in Voya Government's long position.The idea behind Biotechnology Fund Class and Voya Government Money 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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