Correlation Between Voya Solution and Gmo Global

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Can any of the company-specific risk be diversified away by investing in both Voya Solution and Gmo Global 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 Gmo Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Solution Conservative and Gmo Global Equity, you can compare the effects of market volatilities on Voya Solution and Gmo Global 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 Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Solution and Gmo Global.

Diversification Opportunities for Voya Solution and Gmo Global

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Voya and Gmo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution Conservative and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global 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 Conservative are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Voya Solution i.e., Voya Solution and Gmo Global go up and down completely randomly.

Pair Corralation between Voya Solution and Gmo Global

Assuming the 90 days horizon Voya Solution is expected to generate 1.9 times less return on investment than Gmo Global. But when comparing it to its historical volatility, Voya Solution Conservative is 4.0 times less risky than Gmo Global. It trades about 0.08 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,834  in Gmo Global Equity on November 2, 2024 and sell it today you would earn a total of  102.00  from holding Gmo Global Equity or generate 3.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.04%
ValuesDaily Returns

Voya Solution Conservative  vs.  Gmo Global Equity

 Performance 
       Timeline  
Voya Solution Conser 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Conservative are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Gmo Global Equity 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Solution and Gmo Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Voya Solution and Gmo Global

The main advantage of trading using opposite Voya Solution and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Solution position performs unexpectedly, Gmo Global 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 Gmo Global will offset losses from the drop in Gmo Global's long position.
The idea behind Voya Solution Conservative and Gmo Global Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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