Correlation Between Voya Midcap and First Trust

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

By analyzing existing cross correlation between Voya Midcap Opportunities and First Trust Intermediate, you can compare the effects of market volatilities on Voya Midcap and First Trust 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 Midcap with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Midcap and First Trust.

Diversification Opportunities for Voya Midcap and First Trust

0.94

Correlation Coefficient

Voya Midcap  First Trust

Almost no diversification

The 3 months correlation between Voya and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Voya Midcap Opportunities and First Trust Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Intermediate and Voya Midcap 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 Midcap Opportunities are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Intermediate has no effect on the direction of Voya Midcap i.e., Voya Midcap and First Trust go up and down completely randomly.

Pair Corralation between Voya Midcap and First Trust

Assuming the 90 days horizon Voya Midcap Opportunities is expected to generate 2.27 times more return on investment than First Trust. However, Voya Midcap is 2.27 times more volatile than First Trust Intermediate. It trades about 0.19 of its potential returns per unit of risk. First Trust Intermediate is currently generating about 0.31 per unit of risk. If you would invest  2,453  in Voya Midcap Opportunities on May 2, 2025 and sell it today you would earn a total of  302.00  from holding Voya Midcap Opportunities or generate 12.31% return on investment over 90 days.

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

Voya Midcap Opportunities  vs.  First Trust Intermediate

Voya Midcap Opportunities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Voya Midcap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust Intermediate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Intermediate are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly fragile basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Voya Midcap and First Trust

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

The idea behind Voya Midcap Opportunities and First Trust Intermediate 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.