Correlation Between Capital Income and Voya Global

Can any of the company-specific risk be diversified away by investing in both Capital Income and Voya 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 Capital Income and Voya Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Income Builder and Voya Global Perspectives, you can compare the effects of market volatilities on Capital Income and Voya 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 Capital Income with a short position of Voya Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Voya Global.

Diversification Opportunities for Capital Income and Voya Global

0.84

Correlation Coefficient

Capital Income  Voya Global

Very poor diversification

The 3 months correlation between Capital and Voya is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Voya Global Perspectives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Global Perspectives and Capital Income 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 Capital Income Builder are associated (or correlated) with Voya Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Global Perspectives has no effect on the direction of Capital Income i.e., Capital Income and Voya Global go up and down completely randomly.

Pair Corralation between Capital Income and Voya Global

Assuming the 90 days horizon Capital Income Builder is expected to generate 0.96 times more return on investment than Voya Global. However, Capital Income Builder is 1.05 times less risky than Voya Global. It trades about 0.17 of its potential returns per unit of risk. Voya Global Perspectives is currently generating about 0.11 per unit of risk. If you would invest  6,562  in Capital Income Builder on February 18, 2024 and sell it today you would earn a total of  354.00  from holding Capital Income Builder or generate 5.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Capital Income Builder  vs.  Voya Global Perspectives

Capital Income Builder

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Income Builder are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Capital Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Global Perspectives

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Perspectives are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capital Income and Voya Global

The main advantage of trading using opposite Capital Income and Voya Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Voya 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 Voya Global will offset losses from the drop in Voya Global's long position.

The idea behind Capital Income Builder and Voya Global Perspectives 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 Global Correlations module to find global opportunities by holding instruments from different markets.