Correlation Between Voya Index and Voya Solution
Can any of the company-specific risk be diversified away by investing in both Voya Index and Voya Solution 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 Voya Solution 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 Voya Solution 2060, you can compare the effects of market volatilities on Voya Index and Voya Solution 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 Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Index and Voya Solution.
Diversification Opportunities for Voya Index and Voya Solution
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Voya and Voya is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution and Voya Solution 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution 2060 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 Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution 2060 has no effect on the direction of Voya Index i.e., Voya Index and Voya Solution go up and down completely randomly.
Pair Corralation between Voya Index and Voya Solution
Assuming the 90 days horizon Voya Index is expected to generate 1.01 times less return on investment than Voya Solution. But when comparing it to its historical volatility, Voya Index Solution is 1.02 times less risky than Voya Solution. It trades about 0.34 of its potential returns per unit of risk. Voya Solution 2060 is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,186 in Voya Solution 2060 on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Voya Solution 2060 or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Voya Index Solution vs. Voya Solution 2060
Performance |
| Timeline |
| Voya Index Solution |
| Voya Solution 2060 |
Voya Index and Voya Solution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Index and Voya Solution
The main advantage of trading using opposite Voya Index and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Index position performs unexpectedly, Voya Solution 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 Solution will offset losses from the drop in Voya Solution's long position.| Voya Index vs. T Rowe Price | Voya Index vs. T Rowe Price | Voya Index vs. Old Westbury Large | Voya Index vs. Pace Large Growth |
| Voya Solution vs. Voya Bond Index | Voya Solution vs. Voya Bond Index | Voya Solution vs. Voya Limited Maturity | Voya Solution 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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