Correlation Between Voya Vacs and Voya Target

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

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

Diversification Opportunities for Voya Vacs and Voya Target

0.95

Correlation Coefficient

Voya Vacs  Voya Target

Almost no diversification

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

Pair Corralation between Voya Vacs and Voya Target

Assuming the 90 days horizon Voya Vacs is expected to generate 1.1 times less return on investment than Voya Target. In addition to that, Voya Vacs is 1.87 times more volatile than Voya Target Retirement. It trades about 0.12 of its total potential returns per unit of risk. Voya Target Retirement is currently generating about 0.26 per unit of volatility. If you would invest  1,347  in Voya Target Retirement on May 4, 2025 and sell it today you would earn a total of  136.00  from holding Voya Target Retirement or generate 10.1% return on investment over 90 days.

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

Voya Vacs Index  vs.  Voya Target Retirement

Voya Vacs Index

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Vacs Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Voya Vacs may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 basic indicators, Voya Target may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Voya Vacs and Voya Target

The main advantage of trading using opposite Voya Vacs and Voya Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Vacs 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 Voya Vacs Index 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.