Correlation Between Voya Target and Mmzgx

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

Diversification Opportunities for Voya Target and Mmzgx

0.26

Correlation Coefficient

Voya Target  Mmzgx

Modest diversification

The 3 months correlation between Voya and Mmzgx is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement and Mmzgx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmzgx 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 Mmzgx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmzgx has no effect on the direction of Voya Target i.e., Voya Target and Mmzgx go up and down completely randomly.

Pair Corralation between Voya Target and Mmzgx

Assuming the 90 days horizon Voya Target is expected to generate 13.24 times less return on investment than Mmzgx. But when comparing it to its historical volatility, Voya Target Retirement is 5.41 times less risky than Mmzgx. It trades about 0.03 of its potential returns per unit of risk. Mmzgx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,075  in Mmzgx on December 19, 2024 and sell it today you would earn a total of  126.00  from holding Mmzgx or generate 11.72% return on investment over 90 days.

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

Voya Target Retirement  vs.  Mmzgx

Voya Target Retirement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Target Retirement are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Mmzgx

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mmzgx are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mmzgx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Voya Target and Mmzgx

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

The idea behind Voya Target Retirement and Mmzgx 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.