Correlation Between Payden Core and Payden Rygel
Can any of the company-specific risk be diversified away by investing in both Payden Core and Payden Rygel 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 Rygel 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 Rygel, you can compare the effects of market volatilities on Payden Core and Payden Rygel 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 Rygel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Core and Payden Rygel.
Diversification Opportunities for Payden Core and Payden Rygel
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Payden is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Payden E Bond and The Payden Rygel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Rygel 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 Rygel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Rygel has no effect on the direction of Payden Core i.e., Payden Core and Payden Rygel go up and down completely randomly.
Pair Corralation between Payden Core and Payden Rygel
Assuming the 90 days horizon Payden E Bond is expected to generate 2.37 times more return on investment than Payden Rygel. However, Payden Core is 2.37 times more volatile than The Payden Rygel. It trades about 0.05 of its potential returns per unit of risk. The Payden Rygel is currently generating about 0.07 per unit of risk. If you would invest 920.00 in Payden E Bond on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Payden E Bond or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Payden E Bond vs. The Payden Rygel
Performance |
| Timeline |
| Payden E Bond |
| Payden Rygel |
Payden Core and Payden Rygel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Core and Payden Rygel
The main advantage of trading using opposite Payden Core and Payden Rygel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Core position performs unexpectedly, Payden Rygel 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 Rygel will offset losses from the drop in Payden Rygel's long position.| Payden Core vs. Strategic Allocation Aggressive | Payden Core vs. Western Asset High | Payden Core vs. Ppm High Yield | Payden Core vs. Ab High Income |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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