Correlation Between Payden Government and Income Growth
Can any of the company-specific risk be diversified away by investing in both Payden Government and Income Growth 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 Government and Income Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Income Growth Fund, you can compare the effects of market volatilities on Payden Government and Income Growth 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 Government with a short position of Income Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Income Growth.
Diversification Opportunities for Payden Government and Income Growth
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Income is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Income Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Growth and Payden Government 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 Government Fund are associated (or correlated) with Income Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Growth has no effect on the direction of Payden Government i.e., Payden Government and Income Growth go up and down completely randomly.
Pair Corralation between Payden Government and Income Growth
Assuming the 90 days horizon Payden Government is expected to generate 3.54 times less return on investment than Income Growth. But when comparing it to its historical volatility, Payden Government Fund is 3.91 times less risky than Income Growth. It trades about 0.11 of its potential returns per unit of risk. Income Growth Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,051 in Income Growth Fund on September 12, 2024 and sell it today you would earn a total of 776.00 from holding Income Growth Fund or generate 25.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Income Growth Fund
Performance |
| Timeline |
| Payden Government |
| Income Growth |
Payden Government and Income Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Income Growth
The main advantage of trading using opposite Payden Government and Income Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government position performs unexpectedly, Income Growth 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 Income Growth will offset losses from the drop in Income Growth's long position.| Payden Government vs. SCOR PK | Payden Government vs. Morningstar Unconstrained Allocation | Payden Government vs. Via Renewables | Payden Government vs. Bondbloxx ETF Trust |
| Income Growth vs. Ridgeworth Seix Government | Income Growth vs. Dws Government Money | Income Growth vs. Hsbc Government Money | Income Growth vs. Payden Government 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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