Correlation Between Payden Global and Payden Corporate
Can any of the company-specific risk be diversified away by investing in both Payden Global and Payden Corporate 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 Global and Payden Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Global Low and Payden Porate Bond, you can compare the effects of market volatilities on Payden Global and Payden Corporate 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 Global with a short position of Payden Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Global and Payden Corporate.
Diversification Opportunities for Payden Global and Payden Corporate
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Payden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Payden Global Low and Payden Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Porate Bond and Payden Global 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 Global Low are associated (or correlated) with Payden Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Porate Bond has no effect on the direction of Payden Global i.e., Payden Global and Payden Corporate go up and down completely randomly.
Pair Corralation between Payden Global and Payden Corporate
Assuming the 90 days horizon Payden Global Low is expected to under-perform the Payden Corporate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Payden Global Low is 2.78 times less risky than Payden Corporate. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Payden Porate Bond is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 979.00 in Payden Porate Bond on August 29, 2024 and sell it today you would earn a total of 6.00 from holding Payden Porate Bond or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Global Low vs. Payden Porate Bond
Performance |
| Timeline |
| Payden Global Low |
| Payden Porate Bond |
Payden Global and Payden Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Global and Payden Corporate
The main advantage of trading using opposite Payden Global and Payden Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Global position performs unexpectedly, Payden Corporate 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 Corporate will offset losses from the drop in Payden Corporate's long position.| Payden Global vs. Goldman Sachs Trust | Payden Global vs. Icon Financial Fund | Payden Global vs. Davis Financial Fund | Payden Global vs. Financials Ultrasector Profund |
| Payden Corporate vs. Old Westbury Short Term | Payden Corporate vs. Ab Select Longshort | Payden Corporate vs. Angel Oak Ultrashort | Payden Corporate vs. Astor Longshort Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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