Correlation Between Payden Gnma and World Ex
Can any of the company-specific risk be diversified away by investing in both Payden Gnma and World Ex 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 Gnma and World Ex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Gnma Fund and World Ex Core, you can compare the effects of market volatilities on Payden Gnma and World Ex 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 Gnma with a short position of World Ex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Gnma and World Ex.
Diversification Opportunities for Payden Gnma and World Ex
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payden and World is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Payden Gnma Fund and World Ex Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Ex Core and Payden Gnma 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 Gnma Fund are associated (or correlated) with World Ex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Ex Core has no effect on the direction of Payden Gnma i.e., Payden Gnma and World Ex go up and down completely randomly.
Pair Corralation between Payden Gnma and World Ex
Assuming the 90 days horizon Payden Gnma is expected to generate 4.08 times less return on investment than World Ex. But when comparing it to its historical volatility, Payden Gnma Fund is 1.6 times less risky than World Ex. It trades about 0.02 of its potential returns per unit of risk. World Ex Core is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,087 in World Ex Core on August 29, 2024 and sell it today you would earn a total of 250.00 from holding World Ex Core or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Gnma Fund vs. World Ex Core
Performance |
| Timeline |
| Payden Gnma Fund |
| World Ex Core |
Payden Gnma and World Ex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Gnma and World Ex
The main advantage of trading using opposite Payden Gnma and World Ex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Gnma position performs unexpectedly, World Ex 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 World Ex will offset losses from the drop in World Ex's long position.| 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 |
| World Ex vs. Artisan Small Cap | World Ex vs. Ancorathelen Small Mid Cap | World Ex vs. Champlain Small | World Ex vs. Small Cap Growth |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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