Correlation Between Payden Gnma and Payden Core
Can any of the company-specific risk be diversified away by investing in both Payden Gnma and Payden Core 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 Payden Core 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 Payden E Bond, you can compare the effects of market volatilities on Payden Gnma and Payden Core 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 Payden Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Gnma and Payden Core.
Diversification Opportunities for Payden Gnma and Payden Core
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Payden and Payden is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Payden Gnma Fund and Payden E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden E Bond 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 Payden Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden E Bond has no effect on the direction of Payden Gnma i.e., Payden Gnma and Payden Core go up and down completely randomly.
Pair Corralation between Payden Gnma and Payden Core
Assuming the 90 days horizon Payden Gnma Fund is expected to under-perform the Payden Core. In addition to that, Payden Gnma is 1.02 times more volatile than Payden E Bond. It trades about -0.17 of its total potential returns per unit of risk. Payden E Bond is currently generating about -0.15 per unit of volatility. If you would invest 943.00 in Payden E Bond on August 29, 2024 and sell it today you would lose (20.00) from holding Payden E Bond or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Gnma Fund vs. Payden E Bond
Performance |
| Timeline |
| Payden Gnma Fund |
| Payden E Bond |
Payden Gnma and Payden Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Gnma and Payden Core
The main advantage of trading using opposite Payden Gnma and Payden Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Gnma position performs unexpectedly, Payden Core 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 Core will offset losses from the drop in Payden Core'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 |
| Payden Core vs. Wisdomtree Siegel Moderate | Payden Core vs. Pgim Conservative Retirement | Payden Core vs. Saat Moderate Strategy | Payden Core vs. Calvert Moderate Allocation |
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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