Correlation Between Voya Target and Eagle Growth

Can any of the company-specific risk be diversified away by investing in both Voya Target and Eagle Growth 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 Eagle Growth 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 Eagle Growth Income, you can compare the effects of market volatilities on Voya Target and Eagle Growth 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 Eagle Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Target and Eagle Growth.

Diversification Opportunities for Voya Target and Eagle Growth

0.8

Correlation Coefficient

Voya Target  Eagle Growth

Very poor diversification

The 3 months correlation between Voya and Eagle is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement and Eagle Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Growth Income 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 Eagle Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Growth Income has no effect on the direction of Voya Target i.e., Voya Target and Eagle Growth go up and down completely randomly.

Pair Corralation between Voya Target and Eagle Growth

Assuming the 90 days horizon Voya Target Retirement is expected to generate 0.27 times more return on investment than Eagle Growth. However, Voya Target Retirement is 3.77 times less risky than Eagle Growth. It trades about -0.24 of its potential returns per unit of risk. Eagle Growth Income is currently generating about -0.26 per unit of risk. If you would invest  1,401  in Voya Target Retirement on October 9, 2024 and sell it today you would lose (59.00) from holding Voya Target Retirement or give up 4.21% of portfolio value over 90 days.

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

Voya Target Retirement  vs.  Eagle Growth Income

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.

Eagle Growth Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Growth Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Voya Target and Eagle Growth

The main advantage of trading using opposite Voya Target and Eagle Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Target position performs unexpectedly, Eagle Growth 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 Eagle Growth will offset losses from the drop in Eagle Growth's long position.

The idea behind Voya Target Retirement and Eagle Growth Income 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.