Correlation Between NYSE Composite and Payden Equity
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Payden Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on NYSE Composite and Payden Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Payden Equity.
Diversification Opportunities for NYSE Composite and Payden Equity
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Payden is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Payden Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Equity Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Payden Equity go up and down completely randomly.
Pair Corralation between NYSE Composite and Payden Equity
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.79 times more return on investment than Payden Equity. However, NYSE Composite is 1.27 times less risky than Payden Equity. It trades about 0.08 of its potential returns per unit of risk. Payden Equity Income is currently generating about 0.02 per unit of risk. If you would invest 1,544,064 in NYSE Composite on November 27, 2024 and sell it today you would earn a total of 441,856 from holding NYSE Composite or generate 28.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Payden Equity Income
Performance |
| Timeline |
NYSE Composite and Payden Equity Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Payden Equity Income
Pair trading matchups for Payden Equity
Pair Trading with NYSE Composite and Payden Equity
The main advantage of trading using opposite NYSE Composite and Payden Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Payden Equity 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 Equity will offset losses from the drop in Payden Equity's long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| Payden Equity vs. Janus Henderson Global | Payden Equity vs. Eaton Vance Income | Payden Equity vs. William Blair International | Payden Equity vs. Western Asset E |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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