Correlation Between Voya Target and First Trust

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

Diversification Opportunities for Voya Target and First Trust

0.58

Correlation Coefficient

Voya Target  First Trust

Very weak diversification

The 3 months correlation between VOYA and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Voya Target Retirement and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Voya Target i.e., Voya Target and First Trust go up and down completely randomly.

Pair Corralation between Voya Target and First Trust

Assuming the 90 days horizon Voya Target Retirement is expected to generate 2.65 times more return on investment than First Trust. However, Voya Target is 2.65 times more volatile than First Trust Preferred. It trades about 0.23 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.46 per unit of risk. If you would invest  1,379  in Voya Target Retirement on May 17, 2025 and sell it today you would earn a total of  82.00  from holding Voya Target Retirement or generate 5.95% return on investment over 90 days.

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

Voya Target Retirement  vs.  First Trust Preferred

Voya Target Retirement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Target Retirement are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Voya Target is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Trust Preferred

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Preferred are ranked lower than 36 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, First Trust 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 First Trust

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

The idea behind Voya Target Retirement and First Trust Preferred 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.