Correlation Between Mid Cap and Voya Target
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and Voya Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and Voya Target Retirement, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Voya Target.
Diversification Opportunities for Mid Cap and Voya Target
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Voya is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy 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 Mid Cap 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 Mid Cap 15x Strategy 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 Mid Cap i.e., Mid Cap and Voya Target go up and down completely randomly.
Pair Corralation between Mid Cap and Voya Target
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Voya Target. In addition to that, Mid Cap is 2.31 times more volatile than Voya Target Retirement. It trades about -0.26 of its total potential returns per unit of risk. Voya Target Retirement is currently generating about -0.29 per unit of volatility. If you would invest 1,279 in Voya Target Retirement on October 9, 2024 and sell it today you would lose (49.00) from holding Voya Target Retirement or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Voya Target Retirement
Performance |
| Timeline |
| Mid Cap 15x |
| Voya Target Retirement |
Mid Cap and Voya Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Voya Target
The main advantage of trading using opposite Mid Cap and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. Basic Materials Fund | Mid Cap vs. Basic Materials Fund | Mid Cap vs. Banking Fund Class | Mid Cap vs. Basic Materials Fund |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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