Correlation Between Voya Target and Voya Bond
Can any of the company-specific risk be diversified away by investing in both Voya Target and Voya Bond 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 Voya Bond 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 Voya Bond Index, you can compare the effects of market volatilities on Voya Target and Voya Bond 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 Voya Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Target and Voya Bond.
Diversification Opportunities for Voya Target and Voya Bond
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Voya and Voya is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement and Voya Bond Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Bond Index 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 Voya Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Bond Index has no effect on the direction of Voya Target i.e., Voya Target and Voya Bond go up and down completely randomly.
Pair Corralation between Voya Target and Voya Bond
Assuming the 90 days horizon Voya Target Retirement is expected to generate 1.33 times more return on investment than Voya Bond. However, Voya Target is 1.33 times more volatile than Voya Bond Index. It trades about 0.21 of its potential returns per unit of risk. Voya Bond Index is currently generating about 0.22 per unit of risk. If you would invest 1,531 in Voya Target Retirement on September 13, 2024 and sell it today you would earn a total of 27.00 from holding Voya Target Retirement or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Voya Target Retirement vs. Voya Bond Index
Performance |
| Timeline |
| Voya Target Retirement |
| Voya Bond Index |
Voya Target and Voya Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Target and Voya Bond
The main advantage of trading using opposite Voya Target and Voya Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Target position performs unexpectedly, Voya Bond 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 Bond will offset losses from the drop in Voya Bond's long position.| Voya Target vs. Voya Bond Index | Voya Target vs. Voya Bond Index | Voya Target vs. Voya Limited Maturity | Voya Target vs. Voya Limited Maturity |
| Voya Bond vs. Voya Investors Trust | Voya Bond vs. Voya Vacs Index | Voya Bond vs. Voya Vacs Index | Voya Bond vs. Vy T Rowe |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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