Correlation Between Payden Floating and Payden Low
Can any of the company-specific risk be diversified away by investing in both Payden Floating and Payden Low 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 Floating and Payden Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Floating Rate and Payden Low Duration, you can compare the effects of market volatilities on Payden Floating and Payden Low 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 Floating with a short position of Payden Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Floating and Payden Low.
Diversification Opportunities for Payden Floating and Payden Low
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Payden and Payden is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Payden Floating Rate and Payden Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Low Duration and Payden Floating 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 Floating Rate are associated (or correlated) with Payden Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Low Duration has no effect on the direction of Payden Floating i.e., Payden Floating and Payden Low go up and down completely randomly.
Pair Corralation between Payden Floating and Payden Low
Assuming the 90 days horizon Payden Floating Rate is expected to generate 0.67 times more return on investment than Payden Low. However, Payden Floating Rate is 1.49 times less risky than Payden Low. It trades about 0.37 of its potential returns per unit of risk. Payden Low Duration is currently generating about 0.16 per unit of risk. If you would invest 923.00 in Payden Floating Rate on September 1, 2024 and sell it today you would earn a total of 57.00 from holding Payden Floating Rate or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Floating Rate vs. Payden Low Duration
Performance |
| Timeline |
| Payden Floating Rate |
| Payden Low Duration |
Payden Floating and Payden Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Floating and Payden Low
The main advantage of trading using opposite Payden Floating and Payden Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Floating position performs unexpectedly, Payden Low 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 Low will offset losses from the drop in Payden Low's long position.| Payden Floating vs. Payden Porate Bond | Payden Floating vs. Payden Absolute Return | Payden Floating vs. Payden Absolute Return | Payden Floating vs. Payden Emerging Markets |
| Payden Low vs. Vanguard Developed Markets | Payden Low vs. Aqr Long Short Equity | Payden Low vs. Sp Midcap Index | Payden Low vs. Artisan Emerging Markets |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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