Correlation Between Voya Target and Western Asset
Can any of the company-specific risk be diversified away by investing in both Voya Target and Western Asset 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 Target and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Target Retirement and Western Asset Municipal, you can compare the effects of market volatilities on Voya Target and Western Asset 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 Target with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Target and Western Asset.
Diversification Opportunities for Voya Target and Western Asset
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voya and Western is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Voya 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 Voya Target Retirement are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Voya Target i.e., Voya Target and Western Asset go up and down completely randomly.
Pair Corralation between Voya Target and Western Asset
Assuming the 90 days horizon Voya Target Retirement is expected to generate 2.58 times more return on investment than Western Asset. However, Voya Target is 2.58 times more volatile than Western Asset Municipal. It trades about 0.1 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.08 per unit of risk. If you would invest 1,353 in Voya Target Retirement on October 25, 2024 and sell it today you would earn a total of 15.00 from holding Voya Target Retirement or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Voya Target Retirement vs. Western Asset Municipal
Performance |
| Timeline |
| Voya Target Retirement |
| Western Asset Municipal |
Voya Target and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Target and Western Asset
The main advantage of trading using opposite Voya Target and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Target position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Voya Target vs. Health Care Fund | Voya Target vs. Highland Longshort Healthcare | Voya Target vs. Tekla Healthcare Investors | Voya Target vs. Deutsche Health And |
| Western Asset vs. Moderate Balanced Allocation | Western Asset vs. Jp Morgan Smartretirement | Western Asset vs. Voya Target Retirement | Western Asset vs. Calvert Moderate Allocation |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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