Correlation Between American Funds and Payden Limited
Can any of the company-specific risk be diversified away by investing in both American Funds and Payden Limited 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 Funds and Payden Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Payden Limited Maturity, you can compare the effects of market volatilities on American Funds and Payden Limited 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 Funds with a short position of Payden Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Payden Limited.
Diversification Opportunities for American Funds and Payden Limited
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Payden is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Payden Limited Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Limited Maturity and American Funds 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 Funds Fundamental are associated (or correlated) with Payden Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Limited Maturity has no effect on the direction of American Funds i.e., American Funds and Payden Limited go up and down completely randomly.
Pair Corralation between American Funds and Payden Limited
Assuming the 90 days horizon American Funds Fundamental is expected to generate 42.65 times more return on investment than Payden Limited. However, American Funds is 42.65 times more volatile than Payden Limited Maturity. It trades about 0.2 of its potential returns per unit of risk. Payden Limited Maturity is currently generating about 0.22 per unit of risk. If you would invest 8,096 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 322.00 from holding American Funds Fundamental or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Payden Limited Maturity
Performance |
| Timeline |
| American Funds Funda |
| Payden Limited Maturity |
American Funds and Payden Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Payden Limited
The main advantage of trading using opposite American Funds and Payden Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Payden Limited 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 Limited will offset losses from the drop in Payden Limited's long position.| American Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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