Correlation Between American Mutual and Payden Equity
Can any of the company-specific risk be diversified away by investing in both American Mutual 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 American Mutual and Payden Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and Payden Equity Income, you can compare the effects of market volatilities on American Mutual 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 American Mutual with a short position of Payden Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Payden Equity.
Diversification Opportunities for American Mutual and Payden Equity
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Payden is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund 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 American Mutual 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 Mutual Fund 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 American Mutual i.e., American Mutual and Payden Equity go up and down completely randomly.
Pair Corralation between American Mutual and Payden Equity
Assuming the 90 days horizon American Mutual is expected to generate 2.63 times less return on investment than Payden Equity. But when comparing it to its historical volatility, American Mutual Fund is 1.12 times less risky than Payden Equity. It trades about 0.09 of its potential returns per unit of risk. Payden Equity Income is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,903 in Payden Equity Income on August 29, 2024 and sell it today you would earn a total of 105.00 from holding Payden Equity Income or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Payden Equity Income
Performance |
| Timeline |
| American Mutual |
| Payden Equity Income |
American Mutual and Payden Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Payden Equity
The main advantage of trading using opposite American Mutual and Payden Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual 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.| American Mutual vs. Rbc Microcap Value | American Mutual vs. Falcon Focus Scv | American Mutual vs. Scharf Global Opportunity | American Mutual vs. Qs Large Cap |
| Payden Equity vs. Payden Equity Income | Payden Equity vs. Select Fund R | Payden Equity vs. Select Fund C | Payden Equity vs. Sentinel Mon Stock |
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 CEOs Directory module to screen CEOs from public companies around the world.
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