Correlation Between Voya Multi-manager and Voya Target
Can any of the company-specific risk be diversified away by investing in both Voya Multi-manager 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 Voya Multi-manager and Voya Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Multi Manager International and Voya Target In Retirement, you can compare the effects of market volatilities on Voya Multi-manager 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 Voya Multi-manager with a short position of Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Multi-manager and Voya Target.
Diversification Opportunities for Voya Multi-manager and Voya Target
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Voya is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Voya Multi Manager Internation and Voya Target In Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Target In and Voya Multi-manager 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 Multi Manager International 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 In has no effect on the direction of Voya Multi-manager i.e., Voya Multi-manager and Voya Target go up and down completely randomly.
Pair Corralation between Voya Multi-manager and Voya Target
Assuming the 90 days horizon Voya Multi Manager International is expected to generate 2.2 times more return on investment than Voya Target. However, Voya Multi-manager is 2.2 times more volatile than Voya Target In Retirement. It trades about 0.05 of its potential returns per unit of risk. Voya Target In Retirement is currently generating about 0.09 per unit of risk. If you would invest 5,001 in Voya Multi Manager International on September 3, 2024 and sell it today you would earn a total of 1,133 from holding Voya Multi Manager International or generate 22.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voya Multi Manager Internation vs. Voya Target In Retirement
Performance |
| Timeline |
| Voya Multi Manager |
| Voya Target In |
Voya Multi-manager and Voya Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Multi-manager and Voya Target
The main advantage of trading using opposite Voya Multi-manager and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Multi-manager 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.The idea behind Voya Multi Manager International and Voya Target In Retirement 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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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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