Correlation Between Voya Solution and Small Cap
Can any of the company-specific risk be diversified away by investing in both Voya Solution and Small Cap 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 Solution and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Solution 2060 and Small Cap Equity, you can compare the effects of market volatilities on Voya Solution and Small Cap 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 Solution with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Solution and Small Cap.
Diversification Opportunities for Voya Solution and Small Cap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Voya and Small is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution 2060 and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity and Voya Solution 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 Solution 2060 are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of Voya Solution i.e., Voya Solution and Small Cap go up and down completely randomly.
Pair Corralation between Voya Solution and Small Cap
Assuming the 90 days horizon Voya Solution 2060 is expected to generate 0.27 times more return on investment than Small Cap. However, Voya Solution 2060 is 3.69 times less risky than Small Cap. It trades about 0.09 of its potential returns per unit of risk. Small Cap Equity is currently generating about -0.18 per unit of risk. If you would invest 1,241 in Voya Solution 2060 on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Voya Solution 2060 or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Solution 2060 vs. Small Cap Equity
Performance |
| Timeline |
| Voya Solution 2060 |
| Small Cap Equity |
Voya Solution and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Solution and Small Cap
The main advantage of trading using opposite Voya Solution and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Solution position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Voya Solution vs. American Funds 2060 | Voya Solution vs. American Funds 2060 | Voya Solution vs. American Funds 2060 | Voya Solution vs. T Rowe Price |
| Small Cap vs. Elfun Government Money | Small Cap vs. General Money Market | Small Cap vs. Ubs Money Series | Small Cap vs. Schwab Treasury Money |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |