Correlation Between Payden Core and Payden Regal
Can any of the company-specific risk be diversified away by investing in both Payden Core and Payden Regal 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 Core and Payden Regal 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 The Payden Regal, you can compare the effects of market volatilities on Payden Core and Payden Regal 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 Core with a short position of Payden Regal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Core and Payden Regal.
Diversification Opportunities for Payden Core and Payden Regal
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Payden and Payden is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Payden E Bond and The Payden Regal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Regal and Payden Core 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 Regal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Regal has no effect on the direction of Payden Core i.e., Payden Core and Payden Regal go up and down completely randomly.
Pair Corralation between Payden Core and Payden Regal
Assuming the 90 days horizon Payden E Bond is expected to under-perform the Payden Regal. In addition to that, Payden Core is 2.24 times more volatile than The Payden Regal. It trades about -0.25 of its total potential returns per unit of risk. The Payden Regal is currently generating about -0.03 per unit of volatility. If you would invest 637.00 in The Payden Regal on August 25, 2024 and sell it today you would lose (1.00) from holding The Payden Regal or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden E Bond vs. The Payden Regal
Performance |
| Timeline |
| Payden E Bond |
| Payden Regal |
Payden Core and Payden Regal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Core and Payden Regal
The main advantage of trading using opposite Payden Core and Payden Regal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Core position performs unexpectedly, Payden Regal 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 Regal will offset losses from the drop in Payden Regal's long position.| Payden Core vs. Payden Porate Bond | Payden Core vs. Payden Absolute Return | Payden Core vs. Payden Absolute Return | Payden Core vs. Payden Emerging Markets |
| Payden Regal vs. Payden Porate Bond | Payden Regal vs. Payden Absolute Return | Payden Regal vs. Payden Absolute Return | Payden Regal vs. Payden Emerging Markets |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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