Correlation Between NYSE Composite and Payden Gnma
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Payden Gnma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Payden Gnma Fund, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Payden Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Payden Gnma.
Diversification Opportunities for NYSE Composite and Payden Gnma
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Payden is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Payden Gnma go up and down completely randomly.
Pair Corralation between NYSE Composite and Payden Gnma
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.74 times more return on investment than Payden Gnma. However, NYSE Composite is 1.74 times more volatile than Payden Gnma Fund. It trades about 0.12 of its potential returns per unit of risk. Payden Gnma Fund is currently generating about 0.01 per unit of risk. If you would invest 1,685,289 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 327,056 from holding NYSE Composite or generate 19.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Payden Gnma Fund
Performance |
| Timeline |
NYSE Composite and Payden Gnma Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Payden Gnma Fund
Pair trading matchups for Payden Gnma
Pair Trading with NYSE Composite and Payden Gnma
The main advantage of trading using opposite NYSE Composite and Payden Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Payden Gnma vs. Payden Porate Bond | Payden Gnma vs. Payden Absolute Return | Payden Gnma vs. Payden Absolute Return | Payden Gnma vs. Payden Emerging Markets |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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