Correlation Between Payton L and Payton Planar
Can any of the company-specific risk be diversified away by investing in both Payton L and Payton Planar 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 Payton L and Payton Planar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payton L and Payton Planar Magnetics, you can compare the effects of market volatilities on Payton L and Payton Planar 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 Payton L with a short position of Payton Planar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payton L and Payton Planar.
Diversification Opportunities for Payton L and Payton Planar
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payton and Payton is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Payton L and Payton Planar Magnetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payton Planar Magnetics and Payton L 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 Payton L are associated (or correlated) with Payton Planar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payton Planar Magnetics has no effect on the direction of Payton L i.e., Payton L and Payton Planar go up and down completely randomly.
Pair Corralation between Payton L and Payton Planar
Assuming the 90 days trading horizon Payton L is expected to generate 0.39 times more return on investment than Payton Planar. However, Payton L is 2.58 times less risky than Payton Planar. It trades about 0.39 of its potential returns per unit of risk. Payton Planar Magnetics is currently generating about -0.03 per unit of risk. If you would invest 628,400 in Payton L on September 3, 2024 and sell it today you would earn a total of 113,600 from holding Payton L or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 70.77% |
| Values | Daily Returns |
Payton L vs. Payton Planar Magnetics
Performance |
| Timeline |
| Payton L |
| Payton Planar Magnetics |
Payton L and Payton Planar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payton L and Payton Planar
The main advantage of trading using opposite Payton L and Payton Planar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payton L position performs unexpectedly, Payton Planar 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 Payton Planar will offset losses from the drop in Payton Planar's long position.| Payton L vs. Payton Planar Magnetics | Payton L vs. Telsys | Payton L vs. Raval ACS | Payton L vs. Automatic Bank Services |
| Payton Planar vs. Tessenderlo | Payton Planar vs. Jensen Group | Payton Planar vs. Melexis NV | Payton Planar vs. Sipef NV |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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