Correlation Between Payden E and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Payden E 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 E 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 E Bond and Payden Floating Rate, you can compare the effects of market volatilities on Payden E 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 E with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden E and Payden Floating.
Diversification Opportunities for Payden E and Payden Floating
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Payden and Payden is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Payden E 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 E 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 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 E i.e., Payden E and Payden Floating go up and down completely randomly.
Pair Corralation between Payden E and Payden Floating
Assuming the 90 days horizon Payden E Bond is expected to generate 2.2 times more return on investment than Payden Floating. However, Payden E is 2.2 times more volatile than Payden Floating Rate. It trades about 0.06 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.08 per unit of risk. If you would invest 908.00 in Payden E Bond on November 3, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden E Bond vs. Payden Floating Rate
Performance |
| Timeline |
| Payden E Bond |
| Payden Floating Rate |
Payden E and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden E and Payden Floating
The main advantage of trading using opposite Payden E and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden E 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 E vs. Goldman Sachs Short | Payden E vs. Old Westbury California | Payden E vs. Bbh Intermediate Municipal | Payden E vs. Lind Capital Partners |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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