Correlation Between Payden California and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Payden California and Lgm Risk 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 Lgm Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden California Muncipal and Lgm Risk Managed, you can compare the effects of market volatilities on Payden California and Lgm Risk 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 Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden California and Lgm Risk.
Diversification Opportunities for Payden California and Lgm Risk
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payden and Lgm is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Payden California Muncipal and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed 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 Muncipal are associated (or correlated) with Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Payden California i.e., Payden California and Lgm Risk go up and down completely randomly.
Pair Corralation between Payden California and Lgm Risk
Assuming the 90 days horizon Payden California Muncipal is expected to under-perform the Lgm Risk. But the mutual fund apears to be less risky and, when comparing its historical volatility, Payden California Muncipal is 1.69 times less risky than Lgm Risk. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Lgm Risk Managed is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,137 in Lgm Risk Managed on November 27, 2024 and sell it today you would earn a total of 3.00 from holding Lgm Risk Managed or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden California Muncipal vs. Lgm Risk Managed
Performance |
| Timeline |
| Payden California |
| Lgm Risk Managed |
Payden California and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden California and Lgm Risk
The main advantage of trading using opposite Payden California and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden California position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| Payden California vs. Ultra Short Fixed Income | Payden California vs. Doubleline Emerging Markets | Payden California vs. Multisector Bond Sma | Payden California vs. Touchstone Ultra Short |
| Lgm Risk vs. Western Asset Diversified | Lgm Risk vs. Jpmorgan Diversified Fund | Lgm Risk vs. Fidelity Advisor Diversified | Lgm Risk vs. Harbor Diversified International |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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