Correlation Between Voya Target and Global E

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

Diversification Opportunities for Voya Target and Global E

0.82

Correlation Coefficient

Voya Target  Global E

Very poor diversification

The 3 months correlation between Voya and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Voya Target i.e., Voya Target and Global E go up and down completely randomly.

Pair Corralation between Voya Target and Global E

Assuming the 90 days horizon Voya Target Retirement is expected to under-perform the Global E. But the mutual fund apears to be less risky and, when comparing its historical volatility, Voya Target Retirement is 1.17 times less risky than Global E. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Global E Portfolio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,961  in Global E Portfolio on October 9, 2024 and sell it today you would earn a total of  28.00  from holding Global E Portfolio or generate 1.43% return on investment over 90 days.

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

Voya Target Retirement  vs.  Global E Portfolio

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.

Global E Portfolio

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Voya Target and Global E

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

The idea behind Voya Target Retirement and Global E Portfolio 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.