Correlation Between Wealthbuilder Moderate and Voya Target

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

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

Diversification Opportunities for Wealthbuilder Moderate and Voya Target

0.95

Correlation Coefficient

Wealthbuilder Moderate  Voya Target

Almost no diversification

The 3 months correlation between Wealthbuilder and Voya is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Wealthbuilder Moderate Balance 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 Wealthbuilder Moderate 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 Wealthbuilder Moderate Balanced 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 Wealthbuilder Moderate i.e., Wealthbuilder Moderate and Voya Target go up and down completely randomly.

Pair Corralation between Wealthbuilder Moderate and Voya Target

Assuming the 90 days horizon Wealthbuilder Moderate is expected to generate 1.79 times less return on investment than Voya Target. But when comparing it to its historical volatility, Wealthbuilder Moderate Balanced is 1.4 times less risky than Voya Target. It trades about 0.06 of its potential returns per unit of risk. Voya Target Retirement is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,081  in Voya Target Retirement on October 9, 2024 and sell it today you would earn a total of  261.00  from holding Voya Target Retirement or generate 24.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Wealthbuilder Moderate Balance  vs.  Voya Target Retirement

Wealthbuilder Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wealthbuilder Moderate Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Wealthbuilder Moderate 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 Wealthbuilder Moderate and Voya Target

The main advantage of trading using opposite Wealthbuilder Moderate and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wealthbuilder Moderate 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 Wealthbuilder Moderate Balanced 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.