Correlation Between Payden E and Payden Porate
Can any of the company-specific risk be diversified away by investing in both Payden E and Payden Porate 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 E and Payden Porate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden E Bond and Payden Porate Bond, you can compare the effects of market volatilities on Payden E and Payden Porate 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 E with a short position of Payden Porate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden E and Payden Porate.
Diversification Opportunities for Payden E and Payden Porate
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Payden and Payden is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Payden E Bond and Payden Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Porate Bond and Payden E 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 E Bond are associated (or correlated) with Payden Porate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Porate Bond has no effect on the direction of Payden E i.e., Payden E and Payden Porate go up and down completely randomly.
Pair Corralation between Payden E and Payden Porate
Assuming the 90 days horizon Payden E is expected to generate 1.07 times less return on investment than Payden Porate. But when comparing it to its historical volatility, Payden E Bond is 1.06 times less risky than Payden Porate. It trades about 0.11 of its potential returns per unit of risk. Payden Porate Bond is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 925.00 in Payden Porate Bond on September 18, 2024 and sell it today you would earn a total of 57.00 from holding Payden Porate Bond or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden E Bond vs. Payden Porate Bond
Performance |
| Timeline |
| Payden E Bond |
| Payden Porate Bond |
Payden E and Payden Porate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden E and Payden Porate
The main advantage of trading using opposite Payden E and Payden Porate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden E position performs unexpectedly, Payden Porate 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 Porate will offset losses from the drop in Payden Porate's long position.| Payden E vs. Payden Absolute Return | Payden E vs. Payden Absolute Return | Payden E vs. Payden Emerging Markets | Payden E vs. The Payden Regal |
| Payden Porate vs. Payden Absolute Return | Payden Porate vs. Payden Absolute Return | Payden Porate vs. Payden Emerging Markets | Payden Porate vs. The Payden Regal |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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