Correlation Between Voya High and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Voya High and Multisector Bond 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 Voya High and Multisector Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya High Yield and Multisector Bond Sma, you can compare the effects of market volatilities on Voya High and Multisector Bond 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 Voya High with a short position of Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya High and Multisector Bond.
Diversification Opportunities for Voya High and Multisector Bond
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Voya and Multisector is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Voya High Yield and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma and Voya High 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 Voya High Yield are associated (or correlated) with Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Voya High i.e., Voya High and Multisector Bond go up and down completely randomly.
Pair Corralation between Voya High and Multisector Bond
Assuming the 90 days horizon Voya High is expected to generate 1.3 times less return on investment than Multisector Bond. But when comparing it to its historical volatility, Voya High Yield is 1.69 times less risky than Multisector Bond. It trades about 0.19 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,147 in Multisector Bond Sma on September 4, 2024 and sell it today you would earn a total of 225.00 from holding Multisector Bond Sma or generate 19.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya High Yield vs. Multisector Bond Sma
Performance |
| Timeline |
| Voya High Yield |
| Multisector Bond Sma |
Voya High and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya High and Multisector Bond
The main advantage of trading using opposite Voya High and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya High position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond's long position.| Voya High vs. Bbh Intermediate Municipal | Voya High vs. Blrc Sgy Mnp | Voya High vs. Limited Term Tax | Voya High vs. Ambrus Core Bond |
| Multisector Bond vs. The National Tax Free | Multisector Bond vs. Artisan High Income | Multisector Bond vs. Versatile Bond Portfolio | Multisector Bond vs. Touchstone Premium Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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