Correlation Between Iaadx and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Iaadx 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 Iaadx and Payden Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iaadx and Payden Floating Rate, you can compare the effects of market volatilities on Iaadx 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 Iaadx with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iaadx and Payden Floating.
Diversification Opportunities for Iaadx and Payden Floating
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Iaadx and Payden is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Iaadx 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 Iaadx 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 Iaadx 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 Iaadx i.e., Iaadx and Payden Floating go up and down completely randomly.
Pair Corralation between Iaadx and Payden Floating
Assuming the 90 days horizon Iaadx is expected to generate 0.93 times more return on investment than Payden Floating. However, Iaadx is 1.08 times less risky than Payden Floating. It trades about 0.18 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.09 per unit of risk. If you would invest 932.00 in Iaadx on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Iaadx or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iaadx vs. Payden Floating Rate
Performance |
| Timeline |
| Iaadx |
| Payden Floating Rate |
Iaadx and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iaadx and Payden Floating
The main advantage of trading using opposite Iaadx and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iaadx 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.| Iaadx vs. Ishares Municipal Bond | Iaadx vs. Oklahoma Municipal Fund | Iaadx vs. Gamco Global Telecommunications | Iaadx vs. Counterpoint Tactical Municipal |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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