Correlation Between Moderate Balanced and Voya Vacs

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

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

Diversification Opportunities for Moderate Balanced and Voya Vacs

0.95

Correlation Coefficient

Moderate Balanced  Voya Vacs

Almost no diversification

The 3 months correlation between Moderate and Voya is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation and Voya Vacs Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Vacs Index and Moderate Balanced 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 Moderate Balanced Allocation are associated (or correlated) with Voya Vacs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Vacs Index has no effect on the direction of Moderate Balanced i.e., Moderate Balanced and Voya Vacs go up and down completely randomly.

Pair Corralation between Moderate Balanced and Voya Vacs

Assuming the 90 days horizon Moderate Balanced is expected to generate 1.07 times less return on investment than Voya Vacs. But when comparing it to its historical volatility, Moderate Balanced Allocation is 1.75 times less risky than Voya Vacs. It trades about 0.25 of its potential returns per unit of risk. Voya Vacs Index is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,167  in Voya Vacs Index on May 9, 2025 and sell it today you would earn a total of  92.00  from holding Voya Vacs Index or generate 7.88% return on investment over 90 days.

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

Moderate Balanced Allocation  vs.  Voya Vacs Index

Moderate Balanced

Risk-Adjusted Performance

Solid

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

Voya Vacs Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Vacs Index are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Voya Vacs may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Moderate Balanced and Voya Vacs

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

The idea behind Moderate Balanced Allocation and Voya Vacs Index 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.