Correlation Between Dow Jones and Voya Target
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Voya Target 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 Dow Jones and Voya Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Voya Target Retirement, you can compare the effects of market volatilities on Dow Jones and Voya Target 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 Dow Jones with a short position of Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Voya Target.
Diversification Opportunities for Dow Jones and Voya Target
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Voya is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Voya Target Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Target Retirement and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Voya Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Target Retirement has no effect on the direction of Dow Jones i.e., Dow Jones and Voya Target go up and down completely randomly.
Pair Corralation between Dow Jones and Voya Target
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Voya Target. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.02 times less risky than Voya Target. The index trades about -0.07 of its potential returns per unit of risk. The Voya Target Retirement is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,180 in Voya Target Retirement on January 11, 2025 and sell it today you would lose (41.00) from holding Voya Target Retirement or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Voya Target Retirement
Performance |
| Timeline |
Dow Jones and Voya Target Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Voya Target Retirement
Pair trading matchups for Voya Target
Pair Trading with Dow Jones and Voya Target
The main advantage of trading using opposite Dow Jones and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Voya Target 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 Target will offset losses from the drop in Voya Target's long position.| Dow Jones vs. The Joint Corp | Dow Jones vs. Falcon Metals Limited | Dow Jones vs. VirnetX Holding Corp | Dow Jones vs. Western Copper and |
| Voya Target vs. Voya Bond Index | Voya Target vs. Voya Bond Index | Voya Target vs. Voya Limited Maturity | Voya Target vs. Voya Limited Maturity |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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