Correlation Between Payden Strategic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Payden Strategic and Dow Jones 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 Strategic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Strategic Income and Dow Jones Industrial, you can compare the effects of market volatilities on Payden Strategic and Dow Jones 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 Strategic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Strategic and Dow Jones.
Diversification Opportunities for Payden Strategic and Dow Jones
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Payden and Dow is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Payden Strategic Income and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Payden Strategic 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 Strategic Income are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Payden Strategic i.e., Payden Strategic and Dow Jones go up and down completely randomly.
Pair Corralation between Payden Strategic and Dow Jones
Assuming the 90 days horizon Payden Strategic is expected to generate 2.94 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Payden Strategic Income is 3.38 times less risky than Dow Jones. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,409,586 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,081,479 from holding Dow Jones Industrial or generate 31.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Payden Strategic Income vs. Dow Jones Industrial
Performance |
| Timeline |
Payden Strategic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Payden Strategic Income
Pair trading matchups for Payden Strategic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Payden Strategic and Dow Jones
The main advantage of trading using opposite Payden Strategic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Strategic position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Payden Strategic vs. Blackrock Government Bond | Payden Strategic vs. Us Government Securities | Payden Strategic vs. Dunham Porategovernment Bond | Payden Strategic vs. Prudential Government Income |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |