Correlation Between Vanguard Intermediate and Voya Investment
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and Voya Investment 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 Vanguard Intermediate and Voya Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Investment Grade and Voya Investment Grade, you can compare the effects of market volatilities on Vanguard Intermediate and Voya Investment 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 Vanguard Intermediate with a short position of Voya Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and Voya Investment.
Diversification Opportunities for Vanguard Intermediate and Voya Investment
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Voya is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Inv and Voya Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Investment Grade and Vanguard Intermediate 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 Vanguard Intermediate Term Investment Grade are associated (or correlated) with Voya Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Investment Grade has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and Voya Investment go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and Voya Investment
Assuming the 90 days horizon Vanguard Intermediate is expected to generate 1.02 times less return on investment than Voya Investment. But when comparing it to its historical volatility, Vanguard Intermediate Term Investment Grade is 1.04 times less risky than Voya Investment. It trades about 0.06 of its potential returns per unit of risk. Voya Investment Grade is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 818.00 in Voya Investment Grade on September 13, 2024 and sell it today you would earn a total of 106.00 from holding Voya Investment Grade or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Inv vs. Voya Investment Grade
Performance |
| Timeline |
| Vanguard Intermediate |
| Voya Investment Grade |
Vanguard Intermediate and Voya Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and Voya Investment
The main advantage of trading using opposite Vanguard Intermediate and Voya Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, Voya Investment 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 Investment will offset losses from the drop in Voya Investment's long position.The idea behind Vanguard Intermediate Term Investment Grade and Voya Investment Grade 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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