Correlation Between Equity Growth and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Payden Floating 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 Equity Growth and Payden Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and Payden Floating Rate, you can compare the effects of market volatilities on Equity Growth and Payden Floating 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 Equity Growth with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Payden Floating.
Diversification Opportunities for Equity Growth and Payden Floating
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equity and Payden is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Equity Growth i.e., Equity Growth and Payden Floating go up and down completely randomly.
Pair Corralation between Equity Growth and Payden Floating
Assuming the 90 days horizon Equity Growth Fund is expected to generate 557.68 times more return on investment than Payden Floating. However, Equity Growth is 557.68 times more volatile than Payden Floating Rate. It trades about 0.04 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.43 per unit of risk. If you would invest 2,264 in Equity Growth Fund on September 3, 2024 and sell it today you would earn a total of 1,191 from holding Equity Growth Fund or generate 52.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 50.91% |
| Values | Daily Returns |
Equity Growth Fund vs. Payden Floating Rate
Performance |
| Timeline |
| Equity Growth |
| Payden Floating Rate |
Equity Growth and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Payden Floating
The main advantage of trading using opposite Equity Growth and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Payden Floating 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 Floating will offset losses from the drop in Payden Floating's long position.| Equity Growth vs. Blrc Sgy Mnp | Equity Growth vs. Maryland Tax Free Bond | Equity Growth vs. Ambrus Core Bond | Equity Growth vs. Ab Bond Inflation |
| Payden Floating vs. Vanguard Total Stock | Payden Floating vs. Vanguard 500 Index | Payden Floating vs. Vanguard Total Stock | Payden Floating vs. Vanguard Total 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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