Correlation Between Empire State and Payden Gnma
Can any of the company-specific risk be diversified away by investing in both Empire State and Payden Gnma 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 Empire State and Payden Gnma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Payden Gnma Fund, you can compare the effects of market volatilities on Empire State and Payden Gnma 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 Empire State with a short position of Payden Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Payden Gnma.
Diversification Opportunities for Empire State and Payden Gnma
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Empire and Payden is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Payden Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Gnma Fund and Empire State 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 Empire State Realty are associated (or correlated) with Payden Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Gnma Fund has no effect on the direction of Empire State i.e., Empire State and Payden Gnma go up and down completely randomly.
Pair Corralation between Empire State and Payden Gnma
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Payden Gnma. In addition to that, Empire State is 5.19 times more volatile than Payden Gnma Fund. It trades about -0.31 of its total potential returns per unit of risk. Payden Gnma Fund is currently generating about 0.13 per unit of volatility. If you would invest 752.00 in Payden Gnma Fund on November 27, 2024 and sell it today you would earn a total of 6.00 from holding Payden Gnma Fund or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Payden Gnma Fund
Performance |
| Timeline |
| Empire State Realty |
| Payden Gnma Fund |
Empire State and Payden Gnma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Payden Gnma
The main advantage of trading using opposite Empire State and Payden Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Payden Gnma 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 Gnma will offset losses from the drop in Payden Gnma's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Payden Gnma vs. Harbor Diversified International | Payden Gnma vs. Aqr Diversified Arbitrage | Payden Gnma vs. Fidelity Advisor Diversified | Payden Gnma vs. American Century Diversified |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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