Correlation Between Government Securities and Voya Index
Can any of the company-specific risk be diversified away by investing in both Government Securities 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 Government Securities and Voya Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Voya Index Solution, you can compare the effects of market volatilities on Government Securities 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 Government Securities with a short position of Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Voya Index.
Diversification Opportunities for Government Securities and Voya Index
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Government and Voya is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund 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 Government Securities 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 Government Securities Fund 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 Government Securities i.e., Government Securities and Voya Index go up and down completely randomly.
Pair Corralation between Government Securities and Voya Index
Assuming the 90 days horizon Government Securities is expected to generate 4.6 times less return on investment than Voya Index. But when comparing it to its historical volatility, Government Securities Fund is 2.12 times less risky than Voya Index. It trades about 0.04 of its potential returns per unit of risk. Voya Index Solution is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Voya Index Solution on September 4, 2024 and sell it today you would earn a total of 333.00 from holding Voya Index Solution or generate 31.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Government Securities Fund vs. Voya Index Solution
Performance |
| Timeline |
| Government Securities |
| Voya Index Solution |
Government Securities and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Voya Index
The main advantage of trading using opposite Government Securities and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities 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.| Government Securities vs. T Rowe Price | Government Securities vs. Versatile Bond Portfolio | Government Securities vs. Multisector Bond Sma | Government Securities vs. Gmo High Yield |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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