Correlation Between Global Core and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Global Core 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 Global Core and Payden Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Portfolio and Payden Floating Rate, you can compare the effects of market volatilities on Global Core 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 Global Core with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Payden Floating.
Diversification Opportunities for Global Core and Payden Floating
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Payden is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio 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 Global Core 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 Global E Portfolio 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 Global Core i.e., Global Core and Payden Floating go up and down completely randomly.
Pair Corralation between Global Core and Payden Floating
Assuming the 90 days horizon Global E Portfolio is expected to generate 9.7 times more return on investment than Payden Floating. However, Global Core is 9.7 times more volatile than Payden Floating Rate. It trades about 0.1 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.29 per unit of risk. If you would invest 1,921 in Global E Portfolio on September 1, 2024 and sell it today you would earn a total of 233.00 from holding Global E Portfolio or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Portfolio vs. Payden Floating Rate
Performance |
| Timeline |
| Global E Portfolio |
| Payden Floating Rate |
Global Core and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Core and Payden Floating
The main advantage of trading using opposite Global Core and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Core 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.| Global Core vs. Kinetics Small Cap | Global Core vs. Ab Small Cap | Global Core vs. Legg Mason Partners | Global Core vs. Touchstone Small Cap |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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