Correlation Between Payden Core and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Payden Core and Payden Floating 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 Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Core Bond and Payden Floating Rate, you can compare the effects of market volatilities on Payden Core and Payden Floating 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 Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Core and Payden Floating.
Diversification Opportunities for Payden Core and Payden Floating
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Payden and Payden is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Payden Core Bond and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate 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 Core Bond are associated (or correlated) with Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Payden Core i.e., Payden Core and Payden Floating go up and down completely randomly.
Pair Corralation between Payden Core and Payden Floating
Assuming the 90 days horizon Payden Core is expected to generate 1.48 times less return on investment than Payden Floating. In addition to that, Payden Core is 5.8 times more volatile than Payden Floating Rate. It trades about 0.07 of its total potential returns per unit of risk. Payden Floating Rate is currently generating about 0.63 per unit of volatility. If you would invest 975.00 in Payden Floating Rate on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Payden Floating Rate or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Core Bond vs. Payden Floating Rate
Performance |
| Timeline |
| Payden Core Bond |
| Payden Floating Rate |
Payden Core and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Core and Payden Floating
The main advantage of trading using opposite Payden Core and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Core position performs unexpectedly, Payden Floating 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 Floating will offset losses from the drop in Payden Floating's long position.| Payden Core vs. Blrc Sgy Mnp | Payden Core vs. Vanguard Emerging Markets | Payden Core vs. Federated Short Intermediate Duration | Payden Core vs. Multisector Bond Sma |
| Payden Floating vs. Sterling Capital Stratton | Payden Floating vs. Teachers Insurance And | Payden Floating vs. American Century Global | Payden Floating vs. T Rowe Price |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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