Correlation Between Payden Corporate and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Payden Corporate 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 Payden Corporate and Payden Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Porate Bond and Payden Floating Rate, you can compare the effects of market volatilities on Payden Corporate 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 Payden Corporate with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Corporate and Payden Floating.
Diversification Opportunities for Payden Corporate and Payden Floating
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Payden and Payden is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Payden Porate Bond 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 Payden Corporate 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 Payden Porate Bond 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 Payden Corporate i.e., Payden Corporate and Payden Floating go up and down completely randomly.
Pair Corralation between Payden Corporate and Payden Floating
Assuming the 90 days horizon Payden Corporate is expected to generate 1.17 times less return on investment than Payden Floating. In addition to that, Payden Corporate is 6.65 times more volatile than Payden Floating Rate. It trades about 0.08 of its total potential returns per unit of risk. Payden Floating Rate is currently generating about 0.63 per unit of volatility. If you would invest 975.00 in Payden Floating Rate on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Payden Floating Rate or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Payden Porate Bond vs. Payden Floating Rate
Performance |
| Timeline |
| Payden Porate Bond |
| Payden Floating Rate |
Payden Corporate and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Corporate and Payden Floating
The main advantage of trading using opposite Payden Corporate and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Corporate 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.| Payden Corporate vs. Old Westbury Short Term | Payden Corporate vs. Ab Select Longshort | Payden Corporate vs. Angel Oak Ultrashort | Payden Corporate vs. Astor Longshort Fund |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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