Correlation Between Payden Floating and Payden Global
Can any of the company-specific risk be diversified away by investing in both Payden Floating and Payden Global 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 Floating and Payden Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Floating Rate and Payden Global Fixed, you can compare the effects of market volatilities on Payden Floating and Payden Global 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 Floating with a short position of Payden Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Floating and Payden Global.
Diversification Opportunities for Payden Floating and Payden Global
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Payden is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Payden Floating Rate and Payden Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Global Fixed and Payden Floating 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 Floating Rate are associated (or correlated) with Payden Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Global Fixed has no effect on the direction of Payden Floating i.e., Payden Floating and Payden Global go up and down completely randomly.
Pair Corralation between Payden Floating and Payden Global
Assuming the 90 days horizon Payden Floating Rate is expected to generate 0.3 times more return on investment than Payden Global. However, Payden Floating Rate is 3.32 times less risky than Payden Global. It trades about 0.43 of its potential returns per unit of risk. Payden Global Fixed is currently generating about 0.09 per unit of risk. If you would invest 896.00 in Payden Floating Rate on August 31, 2024 and sell it today you would earn a total of 81.00 from holding Payden Floating Rate or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 67.29% |
| Values | Daily Returns |
Payden Floating Rate vs. Payden Global Fixed
Performance |
| Timeline |
| Payden Floating Rate |
| Payden Global Fixed |
Payden Floating and Payden Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Floating and Payden Global
The main advantage of trading using opposite Payden Floating and Payden Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Floating position performs unexpectedly, Payden Global 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 Global will offset losses from the drop in Payden Global's long position.| Payden Floating vs. Vanguard Total Stock | Payden Floating vs. Vanguard 500 Index | Payden Floating vs. Vanguard Total Stock | Payden Floating vs. Vanguard Total Stock |
| Payden Global vs. Payden Corporate Bond | Payden Global vs. Payden Floating Rate | Payden Global vs. Payden Absolute Return | Payden Global vs. Payden California Municipal |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |