Correlation Between Target Retirement and Voya Target

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

By analyzing existing cross correlation between Target Retirement 2040 and Voya Target Retirement, you can compare the effects of market volatilities on Target Retirement 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 Target Retirement with a short position of Voya Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Voya Target.

Diversification Opportunities for Target Retirement and Voya Target

0.99

Correlation Coefficient

Target Retirement  Voya Target

No risk reduction

The 3 months correlation between Target and Voya is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 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 Target Retirement 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 Target Retirement 2040 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 Target Retirement i.e., Target Retirement and Voya Target go up and down completely randomly.

Pair Corralation between Target Retirement and Voya Target

Assuming the 90 days horizon Target Retirement is expected to generate 1.31 times less return on investment than Voya Target. But when comparing it to its historical volatility, Target Retirement 2040 is 1.04 times less risky than Voya Target. It trades about 0.2 of its potential returns per unit of risk. Voya Target Retirement is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,340  in Voya Target Retirement on May 6, 2025 and sell it today you would earn a total of  106.00  from holding Voya Target Retirement or generate 7.91% return on investment over 90 days.

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

Target Retirement 2040  vs.  Voya Target Retirement

Target Retirement 2040

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Target Retirement 2040 are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Target Retirement 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Target Retirement are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Voya Target may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Target Retirement and Voya Target

The main advantage of trading using opposite Target Retirement and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement 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 Target Retirement 2040 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..