Correlation Between Payden Limited and Payden Gnma
Can any of the company-specific risk be diversified away by investing in both Payden Limited and Payden Gnma 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 Limited and Payden Gnma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Limited Maturity and Payden Gnma Fund, you can compare the effects of market volatilities on Payden Limited and Payden Gnma 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 Limited with a short position of Payden Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Limited and Payden Gnma.
Diversification Opportunities for Payden Limited and Payden Gnma
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Payden is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Payden Limited Maturity and Payden Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Gnma Fund and Payden Limited 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 Limited Maturity are associated (or correlated) with Payden Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Gnma Fund has no effect on the direction of Payden Limited i.e., Payden Limited and Payden Gnma go up and down completely randomly.
Pair Corralation between Payden Limited and Payden Gnma
Assuming the 90 days horizon Payden Limited Maturity is expected to generate 0.22 times more return on investment than Payden Gnma. However, Payden Limited Maturity is 4.52 times less risky than Payden Gnma. It trades about 0.22 of its potential returns per unit of risk. Payden Gnma Fund is currently generating about 0.02 per unit of risk. If you would invest 853.00 in Payden Limited Maturity on August 25, 2024 and sell it today you would earn a total of 103.00 from holding Payden Limited Maturity or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Limited Maturity vs. Payden Gnma Fund
Performance |
| Timeline |
| Payden Limited Maturity |
| Payden Gnma Fund |
Payden Limited and Payden Gnma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Limited and Payden Gnma
The main advantage of trading using opposite Payden Limited and Payden Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Limited position performs unexpectedly, Payden Gnma 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 Gnma will offset losses from the drop in Payden Gnma's long position.| Payden Limited vs. Global Technology Portfolio | Payden Limited vs. Technology Ultrasector Profund | Payden Limited vs. Icon Information Technology | Payden Limited vs. Towpath Technology |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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