Correlation Between Payden Rygel and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Payden Rygel and Financial Industries 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 Rygel and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Rygel Investment and Financial Industries Fund, you can compare the effects of market volatilities on Payden Rygel and Financial Industries 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 Rygel with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Rygel and Financial Industries.
Diversification Opportunities for Payden Rygel and Financial Industries
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payden and Financial is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Payden Rygel Investment and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Payden Rygel 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 Rygel Investment are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Payden Rygel i.e., Payden Rygel and Financial Industries go up and down completely randomly.
Pair Corralation between Payden Rygel and Financial Industries
Assuming the 90 days horizon Payden Rygel is expected to generate 4.23 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Payden Rygel Investment is 2.5 times less risky than Financial Industries. It trades about 0.05 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Financial Industries Fund on November 1, 2024 and sell it today you would earn a total of 624.00 from holding Financial Industries Fund or generate 47.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Payden Rygel Investment vs. Financial Industries Fund
Performance |
| Timeline |
| Payden Rygel Investment |
| Financial Industries |
Payden Rygel and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Rygel and Financial Industries
The main advantage of trading using opposite Payden Rygel and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Rygel position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Payden Rygel vs. Financial Industries Fund | Payden Rygel vs. T Rowe Price | Payden Rygel vs. Angel Oak Financial | Payden Rygel vs. Prudential Financial Services |
| Financial Industries vs. Nuveen Missouri Municipal | Financial Industries vs. Blrc Sgy Mnp | Financial Industries vs. Multisector Bond Sma | Financial Industries vs. Artisan High Income |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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