Correlation Between Select Fund and Payden Equity
Can any of the company-specific risk be diversified away by investing in both Select Fund and Payden Equity 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 Select Fund and Payden Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund C and Payden Equity Income, you can compare the effects of market volatilities on Select Fund and Payden Equity 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 Select Fund with a short position of Payden Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Payden Equity.
Diversification Opportunities for Select Fund and Payden Equity
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and Payden is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund C and Payden Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Equity Income and Select Fund 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 Select Fund C are associated (or correlated) with Payden Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Equity Income has no effect on the direction of Select Fund i.e., Select Fund and Payden Equity go up and down completely randomly.
Pair Corralation between Select Fund and Payden Equity
Assuming the 90 days horizon Select Fund is expected to generate 2.02 times less return on investment than Payden Equity. In addition to that, Select Fund is 1.73 times more volatile than Payden Equity Income. It trades about 0.08 of its total potential returns per unit of risk. Payden Equity Income is currently generating about 0.28 per unit of volatility. If you would invest 1,617 in Payden Equity Income on November 3, 2024 and sell it today you would earn a total of 68.00 from holding Payden Equity Income or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Select Fund C vs. Payden Equity Income
Performance |
| Timeline |
| Select Fund C |
| Payden Equity Income |
Select Fund and Payden Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Payden Equity
The main advantage of trading using opposite Select Fund and Payden Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Payden Equity 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 Equity will offset losses from the drop in Payden Equity's long position.| Select Fund vs. Rationalpier 88 Convertible | Select Fund vs. Rbc Bluebay Emerging | Select Fund vs. Chartwell Short Duration | Select Fund vs. Ambrus Core Bond |
| Payden Equity vs. Payden Emerging Markets | Payden Equity vs. World Ex Core | Payden Equity vs. Payden Gnma Fund | Payden Equity vs. Northern Large Cap |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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