Correlation Between Payden Core and Western Asset
Can any of the company-specific risk be diversified away by investing in both Payden Core and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on Payden Core and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Core and Western Asset.
Diversification Opportunities for Payden Core and Western Asset
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Western is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Payden E Bond and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Payden Core i.e., Payden Core and Western Asset go up and down completely randomly.
Pair Corralation between Payden Core and Western Asset
Assuming the 90 days horizon Payden E Bond is expected to generate 1.49 times more return on investment than Western Asset. However, Payden Core is 1.49 times more volatile than Western Asset High. It trades about 0.2 of its potential returns per unit of risk. Western Asset High is currently generating about 0.19 per unit of risk. If you would invest 912.00 in Payden E Bond on November 27, 2024 and sell it today you would earn a total of 10.00 from holding Payden E Bond or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden E Bond vs. Western Asset High
Performance |
| Timeline |
| Payden E Bond |
| Western Asset High |
Payden Core and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Core and Western Asset
The main advantage of trading using opposite Payden Core and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Core position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Payden Core vs. Dreyfusstandish Global Fixed | Payden Core vs. T Rowe Price | Payden Core vs. Artisan Select Equity | Payden Core vs. Rbc Funds Trust |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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