Correlation Between Smallcap Fund and Voya Index

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

By analyzing existing cross correlation between Smallcap Fund Fka and Voya Index Solution, you can compare the effects of market volatilities on Smallcap Fund and Voya Index 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 Smallcap Fund with a short position of Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Voya Index.

Diversification Opportunities for Smallcap Fund and Voya Index

0.75

Correlation Coefficient

Smallcap Fund  Voya Index

Poor diversification

The 3 months correlation between Smallcap and Voya is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Voya Index go up and down completely randomly.

Pair Corralation between Smallcap Fund and Voya Index

Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.98 times more return on investment than Voya Index. However, Smallcap Fund is 1.98 times more volatile than Voya Index Solution. It trades about 0.23 of its potential returns per unit of risk. Voya Index Solution is currently generating about 0.24 per unit of risk. If you would invest  2,434  in Smallcap Fund Fka on May 26, 2025 and sell it today you would earn a total of  339.00  from holding Smallcap Fund Fka or generate 13.93% return on investment over 90 days.

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

Smallcap Fund Fka  vs.  Voya Index Solution

Smallcap Fund Fka

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Fund Fka are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Smallcap Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Voya Index Solution

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Index Solution are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Voya Index may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Smallcap Fund and Voya Index

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

The idea behind Smallcap Fund Fka and Voya Index Solution 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.