Correlation Between American Century and Payden Low
Can any of the company-specific risk be diversified away by investing in both American Century and Payden Low 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 American Century and Payden Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Diversified and Payden Low Duration, you can compare the effects of market volatilities on American Century and Payden Low 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 American Century with a short position of Payden Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Payden Low.
Diversification Opportunities for American Century and Payden Low
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Payden is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified and Payden Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Low Duration and American Century 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 American Century Diversified are associated (or correlated) with Payden Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Low Duration has no effect on the direction of American Century i.e., American Century and Payden Low go up and down completely randomly.
Pair Corralation between American Century and Payden Low
Assuming the 90 days horizon American Century is expected to generate 1.32 times less return on investment than Payden Low. In addition to that, American Century is 2.83 times more volatile than Payden Low Duration. It trades about 0.03 of its total potential returns per unit of risk. Payden Low Duration is currently generating about 0.13 per unit of volatility. If you would invest 894.00 in Payden Low Duration on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Payden Low Duration or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
American Century Diversified vs. Payden Low Duration
Performance |
| Timeline |
| American Century Div |
| Payden Low Duration |
American Century and Payden Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Payden Low
The main advantage of trading using opposite American Century and Payden Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Payden Low 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 Payden Low will offset losses from the drop in Payden Low's long position.| American Century vs. Ms Global Fixed | American Century vs. Ultra Short Fixed Income | American Century vs. Calamos Global Equity | American Century vs. Cutler Equity |
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Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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