Correlation Between Vanguard Financials and Voya Target
Can any of the company-specific risk be diversified away by investing in both Vanguard Financials 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 Vanguard Financials and Voya Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Financials Index and Voya Target Retirement, you can compare the effects of market volatilities on Vanguard Financials 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 Vanguard Financials with a short position of Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Voya Target.
Diversification Opportunities for Vanguard Financials and Voya Target
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Voya is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index 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 Vanguard Financials 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 Vanguard Financials Index 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 Vanguard Financials i.e., Vanguard Financials and Voya Target go up and down completely randomly.
Pair Corralation between Vanguard Financials and Voya Target
Assuming the 90 days horizon Vanguard Financials Index is expected to generate 1.69 times more return on investment than Voya Target. However, Vanguard Financials is 1.69 times more volatile than Voya Target Retirement. It trades about 0.01 of its potential returns per unit of risk. Voya Target Retirement is currently generating about -0.02 per unit of risk. If you would invest 6,283 in Vanguard Financials Index on October 30, 2024 and sell it today you would earn a total of 4.00 from holding Vanguard Financials Index or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Financials Index vs. Voya Target Retirement
Performance |
| Timeline |
| Vanguard Financials Index |
| Voya Target Retirement |
Vanguard Financials and Voya Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Financials and Voya Target
The main advantage of trading using opposite Vanguard Financials and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Financials 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 Vanguard Financials Index and Voya Target 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.
| Voya Target vs. Mesirow Financial High | Voya Target vs. Pace High Yield | Voya Target vs. Transamerica High Yield | Voya Target vs. Siit High Yield |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |