Correlation Between Newlake Capital and Voya Large

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

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

Diversification Opportunities for Newlake Capital and Voya Large

0.7

Correlation Coefficient

Newlake Capital  Voya Large

Poor diversification

The 3 months correlation between Newlake and Voya is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Newlake Capital Partners and Voya Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap and Newlake Capital 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 Newlake Capital Partners are associated (or correlated) with Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Newlake Capital i.e., Newlake Capital and Voya Large go up and down completely randomly.

Pair Corralation between Newlake Capital and Voya Large

Given the investment horizon of 90 days Newlake Capital Partners is expected to generate 0.76 times more return on investment than Voya Large. However, Newlake Capital Partners is 1.32 times less risky than Voya Large. It trades about 0.01 of its potential returns per unit of risk. Voya Large Cap is currently generating about -0.03 per unit of risk. If you would invest  1,792  in Newlake Capital Partners on January 19, 2024 and sell it today you would lose (14.00) from holding Newlake Capital Partners or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Newlake Capital Partners  vs.  Voya Large Cap

Newlake Capital Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newlake Capital Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Newlake Capital may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Voya Large Cap

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Newlake Capital and Voya Large

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

The idea behind Newlake Capital Partners and Voya Large Cap 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.