Correlation Between Vanguard Target and Voya Index
Can any of the company-specific risk be diversified away by investing in both Vanguard Target and Voya Index 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 Target and Voya Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Target Retirement and Voya Index Solution, you can compare the effects of market volatilities on Vanguard Target and Voya Index 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 Target with a short position of Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and Voya Index.
Diversification Opportunities for Vanguard Target and Voya Index
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Voya is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution and Vanguard Target 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 Target Retirement are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Vanguard Target i.e., Vanguard Target and Voya Index go up and down completely randomly.
Pair Corralation between Vanguard Target and Voya Index
Assuming the 90 days horizon Vanguard Target Retirement is expected to generate 0.94 times more return on investment than Voya Index. However, Vanguard Target Retirement is 1.07 times less risky than Voya Index. It trades about 0.11 of its potential returns per unit of risk. Voya Index Solution is currently generating about 0.09 per unit of risk. If you would invest 2,486 in Vanguard Target Retirement on September 12, 2024 and sell it today you would earn a total of 1,049 from holding Vanguard Target Retirement or generate 42.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Target Retirement vs. Voya Index Solution
Performance |
| Timeline |
| Vanguard Target Reti |
| Voya Index Solution |
Vanguard Target and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Target and Voya Index
The main advantage of trading using opposite Vanguard Target and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Target position performs unexpectedly, Voya Index 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 Index will offset losses from the drop in Voya Index's long position.| Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement |
| Voya Index vs. Vanguard Target Retirement | Voya Index vs. American Funds 2065 | Voya Index vs. American Funds 2065 | Voya Index vs. American Funds 2065 |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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