Correlation Between Payden Gnma and Payden Equity
Can any of the company-specific risk be diversified away by investing in both Payden Gnma and Payden Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Payden Gnma and Payden Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Gnma and Payden Equity.
Diversification Opportunities for Payden Gnma and Payden Equity
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Payden is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Payden Gnma Fund and Payden Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Equity Income has no effect on the direction of Payden Gnma i.e., Payden Gnma and Payden Equity go up and down completely randomly.
Pair Corralation between Payden Gnma and Payden Equity
Assuming the 90 days horizon Payden Gnma is expected to generate 4.4 times less return on investment than Payden Equity. But when comparing it to its historical volatility, Payden Gnma Fund is 1.43 times less risky than Payden Equity. It trades about 0.04 of its potential returns per unit of risk. Payden Equity Income is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,570 in Payden Equity Income on August 29, 2024 and sell it today you would earn a total of 438.00 from holding Payden Equity Income or generate 27.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Gnma Fund vs. Payden Equity Income
Performance |
| Timeline |
| Payden Gnma Fund |
| Payden Equity Income |
Payden Gnma and Payden Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Gnma and Payden Equity
The main advantage of trading using opposite Payden Gnma and Payden Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Gnma position performs unexpectedly, Payden Equity 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 Equity will offset losses from the drop in Payden Equity'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 Equity vs. Payden Equity Income | Payden Equity vs. Select Fund R | Payden Equity vs. Select Fund C | Payden Equity vs. Sentinel Mon Stock |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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