Correlation Between Voya Index and Government Securities
Can any of the company-specific risk be diversified away by investing in both Voya Index and Government Securities 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 Index and Government Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Index Solution and Government Securities Fund, you can compare the effects of market volatilities on Voya Index and Government Securities 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 Index with a short position of Government Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Index and Government Securities.
Diversification Opportunities for Voya Index and Government Securities
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Voya and Government is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Securities and Voya Index 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 Index Solution are associated (or correlated) with Government Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Voya Index i.e., Voya Index and Government Securities go up and down completely randomly.
Pair Corralation between Voya Index and Government Securities
Assuming the 90 days horizon Voya Index Solution is expected to generate 2.32 times more return on investment than Government Securities. However, Voya Index is 2.32 times more volatile than Government Securities Fund. It trades about 0.13 of its potential returns per unit of risk. Government Securities Fund is currently generating about -0.05 per unit of risk. If you would invest 1,319 in Voya Index Solution on September 3, 2024 and sell it today you would earn a total of 65.00 from holding Voya Index Solution or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Index Solution vs. Government Securities Fund
Performance |
| Timeline |
| Voya Index Solution |
| Government Securities |
Voya Index and Government Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Index and Government Securities
The main advantage of trading using opposite Voya Index and Government Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Index position performs unexpectedly, Government Securities 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 Government Securities will offset losses from the drop in Government Securities' long position.| Voya Index vs. Government Securities Fund | Voya Index vs. Lord Abbett Government | Voya Index vs. Virtus Seix Government | Voya Index vs. Dunham Porategovernment Bond |
| Government Securities vs. T Rowe Price | Government Securities vs. T Rowe Price | Government Securities vs. T Rowe Price | Government Securities vs. T Rowe Price |
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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