Correlation Between Voya Stock and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Voya Stock and Vanguard Total 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 Stock and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Stock Index and Vanguard Total Stock, you can compare the effects of market volatilities on Voya Stock and Vanguard Total 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 Stock with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Stock and Vanguard Total.
Diversification Opportunities for Voya Stock and Vanguard Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Voya and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Voya Stock Index and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Voya Stock 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 Stock Index are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Voya Stock i.e., Voya Stock and Vanguard Total go up and down completely randomly.
Pair Corralation between Voya Stock and Vanguard Total
Assuming the 90 days horizon Voya Stock Index is expected to generate 0.96 times more return on investment than Vanguard Total. However, Voya Stock Index is 1.04 times less risky than Vanguard Total. It trades about -0.15 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about -0.15 per unit of risk. If you would invest 1,918 in Voya Stock Index on January 26, 2024 and sell it today you would lose (48.00) from holding Voya Stock Index or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Stock Index vs. Vanguard Total Stock
Performance |
| Timeline |
| Voya Stock Index |
| Vanguard Total Stock |
Voya Stock and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Stock and Vanguard Total
The main advantage of trading using opposite Voya Stock and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Stock position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.The idea behind Voya Stock Index and Vanguard Total Stock 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.| Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard 500 Index | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total Stock |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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