Correlation Between Payden California and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Payden California and Dow Jones 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 California and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden California Municipal and Dow Jones Industrial, you can compare the effects of market volatilities on Payden California and Dow Jones 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 California with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden California and Dow Jones.
Diversification Opportunities for Payden California and Dow Jones
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payden and Dow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Payden California Municipal and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Payden California 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 California Municipal are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Payden California i.e., Payden California and Dow Jones go up and down completely randomly.
Pair Corralation between Payden California and Dow Jones
Assuming the 90 days horizon Payden California Municipal is expected to generate 0.28 times more return on investment than Dow Jones. However, Payden California Municipal is 3.57 times less risky than Dow Jones. It trades about 0.32 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.27 per unit of risk. If you would invest 984.00 in Payden California Municipal on November 29, 2024 and sell it today you would earn a total of 11.00 from holding Payden California Municipal or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Payden California Municipal vs. Dow Jones Industrial
Performance |
| Timeline |
Payden California and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Payden California Municipal
Pair trading matchups for Payden California
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Payden California and Dow Jones
The main advantage of trading using opposite Payden California and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden California position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Payden California vs. Fidelity Advisor Financial | Payden California vs. Mesirow Financial Small | Payden California vs. Blackrock Financial Institutions | Payden California vs. Goldman Sachs Financial |
| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air Group |
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.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |