Correlation Between Aam/himco Short and Voya Target

Can any of the company-specific risk be diversified away by investing in both Aam/himco Short 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 Aam/himco Short and Voya Target into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aamhimco Short Duration and Voya Target Retirement, you can compare the effects of market volatilities on Aam/himco Short 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 Aam/himco Short with a short position of Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam/himco Short and Voya Target.

Diversification Opportunities for Aam/himco Short and Voya Target

0.38

Correlation Coefficient

Aam/himco Short  Voya Target

Weak diversification

The 3 months correlation between Aam/himco and Voya is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aamhimco Short Duration 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 Aam/himco Short 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 Aamhimco Short Duration 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 Aam/himco Short i.e., Aam/himco Short and Voya Target go up and down completely randomly.

Pair Corralation between Aam/himco Short and Voya Target

Assuming the 90 days horizon Aamhimco Short Duration is expected to generate 0.13 times more return on investment than Voya Target. However, Aamhimco Short Duration is 7.6 times less risky than Voya Target. It trades about -0.16 of its potential returns per unit of risk. Voya Target Retirement is currently generating about -0.22 per unit of risk. If you would invest  1,004  in Aamhimco Short Duration on October 11, 2024 and sell it today you would lose (4.00) from holding Aamhimco Short Duration or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aamhimco Short Duration  vs.  Voya Target Retirement

Aamhimco Short Duration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aamhimco Short Duration are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aam/himco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voya Target Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Target Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Voya Target is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aam/himco Short and Voya Target

The main advantage of trading using opposite Aam/himco Short and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam/himco Short 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 Aamhimco Short Duration 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.