Correlation Between Voya Solution and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Voya Solution and Sterling Capital 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 Sterling Capital 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 Sterling Capital Total, you can compare the effects of market volatilities on Voya Solution and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Solution and Sterling Capital.
Diversification Opportunities for Voya Solution and Sterling Capital
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Voya and Sterling is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Voya Solution Conservative and Sterling Capital Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Total 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Total has no effect on the direction of Voya Solution i.e., Voya Solution and Sterling Capital go up and down completely randomly.
Pair Corralation between Voya Solution and Sterling Capital
Assuming the 90 days horizon Voya Solution is expected to generate 1.12 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Voya Solution Conservative is 1.04 times less risky than Sterling Capital. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Total is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Sterling Capital Total on October 24, 2024 and sell it today you would earn a total of 5.00 from holding Sterling Capital Total or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Solution Conservative vs. Sterling Capital Total
Performance |
| Timeline |
| Voya Solution Conser |
| Sterling Capital Total |
Voya Solution and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Solution and Sterling Capital
The main advantage of trading using opposite Voya Solution and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Solution position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Voya Solution vs. Federated Hermes Conservative | Voya Solution vs. Global Diversified Income | Voya Solution vs. Tax Free Conservative Income | Voya Solution vs. Tiaa Cref Lifestyle Conservative |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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