Correlation Between Payden Floating and Payden Gnma
Can any of the company-specific risk be diversified away by investing in both Payden Floating and Payden Gnma 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 Gnma 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 Gnma Fund, you can compare the effects of market volatilities on Payden Floating and Payden Gnma 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 Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Floating and Payden Gnma.
Diversification Opportunities for Payden Floating and Payden Gnma
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Payden and Payden is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Payden Floating Rate and Payden Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Gnma Fund 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 Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Gnma Fund has no effect on the direction of Payden Floating i.e., Payden Floating and Payden Gnma go up and down completely randomly.
Pair Corralation between Payden Floating and Payden Gnma
Assuming the 90 days horizon Payden Floating Rate is expected to generate 0.17 times more return on investment than Payden Gnma. However, Payden Floating Rate is 5.84 times less risky than Payden Gnma. It trades about 0.53 of its potential returns per unit of risk. Payden Gnma Fund is currently generating about 0.02 per unit of risk. If you would invest 915.00 in Payden Floating Rate on August 29, 2024 and sell it today you would earn a total of 68.00 from holding Payden Floating Rate or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Payden Floating Rate vs. Payden Gnma Fund
Performance |
| Timeline |
| Payden Floating Rate |
| Payden Gnma Fund |
Payden Floating and Payden Gnma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Floating and Payden Gnma
The main advantage of trading using opposite Payden Floating and Payden Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Floating position performs unexpectedly, Payden Gnma 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 Gnma will offset losses from the drop in Payden Gnma's long position.| Payden Floating vs. Sterling Capital Stratton | Payden Floating vs. Teachers Insurance And | Payden Floating vs. American Century Global | Payden Floating vs. T Rowe Price |
| Payden Gnma vs. T Rowe Price | Payden Gnma vs. Sentinel Small Pany | Payden Gnma vs. Adams Diversified Equity | Payden Gnma vs. Delaware Limited Term Diversified |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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