Correlation Between Voya Emerging and BlackRock Energy

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

By analyzing existing cross correlation between Voya Emerging Markets and BlackRock Energy and, you can compare the effects of market volatilities on Voya Emerging and BlackRock Energy 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 Emerging with a short position of BlackRock Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Emerging and BlackRock Energy.

Diversification Opportunities for Voya Emerging and BlackRock Energy

0.26

Correlation Coefficient

Voya Emerging  BlackRock Energy

Modest diversification

The 3 months correlation between Voya and BlackRock is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Voya Emerging Markets and BlackRock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Energy and Voya Emerging 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 Emerging Markets are associated (or correlated) with BlackRock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Energy has no effect on the direction of Voya Emerging i.e., Voya Emerging and BlackRock Energy go up and down completely randomly.

Pair Corralation between Voya Emerging and BlackRock Energy

Considering the 90-day investment horizon Voya Emerging Markets is expected to under-perform the BlackRock Energy. But the fund apears to be less risky and, when comparing its historical volatility, Voya Emerging Markets is 1.05 times less risky than BlackRock Energy. The fund trades about -0.29 of its potential returns per unit of risk. The BlackRock Energy and is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,285  in BlackRock Energy and on August 21, 2024 and sell it today you would earn a total of  65.00  from holding BlackRock Energy and or generate 5.06% return on investment over 90 days.

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

Voya Emerging Markets  vs.  BlackRock Energy and

Voya Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical indicators, Voya Emerging is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, BlackRock Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Voya Emerging and BlackRock Energy

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

The idea behind Voya Emerging Markets and BlackRock Energy and 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.