Correlation Between Voya Index and Vanguard Financials
Can any of the company-specific risk be diversified away by investing in both Voya Index and Vanguard Financials 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 Vanguard Financials 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 Vanguard Financials Index, you can compare the effects of market volatilities on Voya Index and Vanguard Financials 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 Vanguard Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Index and Vanguard Financials.
Diversification Opportunities for Voya Index and Vanguard Financials
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Vanguard is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution and Vanguard Financials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Financials Index 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 Vanguard Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Financials Index has no effect on the direction of Voya Index i.e., Voya Index and Vanguard Financials go up and down completely randomly.
Pair Corralation between Voya Index and Vanguard Financials
Assuming the 90 days horizon Voya Index Solution is expected to generate 0.66 times more return on investment than Vanguard Financials. However, Voya Index Solution is 1.51 times less risky than Vanguard Financials. It trades about 0.04 of its potential returns per unit of risk. Vanguard Financials Index is currently generating about -0.03 per unit of risk. If you would invest 1,616 in Voya Index Solution on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Voya Index Solution or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Index Solution vs. Vanguard Financials Index
Performance |
| Timeline |
| Voya Index Solution |
| Vanguard Financials Index |
Voya Index and Vanguard Financials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Index and Vanguard Financials
The main advantage of trading using opposite Voya Index and Vanguard Financials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Index position performs unexpectedly, Vanguard Financials 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 Vanguard Financials will offset losses from the drop in Vanguard Financials' long position.| Voya Index vs. Cutler Equity | Voya Index vs. Huber Capital Equity | Voya Index vs. Ms Global Fixed | Voya Index vs. Locorr Dynamic Equity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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