Correlation Between Pace Large and Payden Strategic
Can any of the company-specific risk be diversified away by investing in both Pace Large and Payden Strategic 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 Pace Large and Payden Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Large Value and Payden Strategic Income, you can compare the effects of market volatilities on Pace Large and Payden Strategic 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 Pace Large with a short position of Payden Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Payden Strategic.
Diversification Opportunities for Pace Large and Payden Strategic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pace and Payden is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Payden Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Strategic Income and Pace Large 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 Pace Large Value are associated (or correlated) with Payden Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Strategic Income has no effect on the direction of Pace Large i.e., Pace Large and Payden Strategic go up and down completely randomly.
Pair Corralation between Pace Large and Payden Strategic
Assuming the 90 days horizon Pace Large Value is expected to generate 4.28 times more return on investment than Payden Strategic. However, Pace Large is 4.28 times more volatile than Payden Strategic Income. It trades about 0.05 of its potential returns per unit of risk. Payden Strategic Income is currently generating about 0.14 per unit of risk. If you would invest 1,795 in Pace Large Value on November 27, 2024 and sell it today you would earn a total of 343.00 from holding Pace Large Value or generate 19.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Large Value vs. Payden Strategic Income
Performance |
| Timeline |
| Pace Large Value |
| Payden Strategic Income |
Pace Large and Payden Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Large and Payden Strategic
The main advantage of trading using opposite Pace Large and Payden Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large position performs unexpectedly, Payden Strategic 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 Strategic will offset losses from the drop in Payden Strategic's long position.| Pace Large vs. Fidelity Advisor Financial | Pace Large vs. Goldman Sachs Financial | Pace Large vs. Davis Financial Fund | Pace Large vs. Blackrock Financial Institutions |
| Payden Strategic vs. Intal High Relative | Payden Strategic vs. Glg Intl Small | Payden Strategic vs. Versatile Bond Portfolio | Payden Strategic vs. Guidemark E Fixed |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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