Correlation Between Payden Us and Great-west
Can any of the company-specific risk be diversified away by investing in both Payden Us and Great-west 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 Us and Great-west 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 Great West Government Mortgage, you can compare the effects of market volatilities on Payden Us and Great-west 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 Us with a short position of Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Us and Great-west.
Diversification Opportunities for Payden Us and Great-west
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Great-west is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Great West Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Government and Payden Us 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 Great-west. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Government has no effect on the direction of Payden Us i.e., Payden Us and Great-west go up and down completely randomly.
Pair Corralation between Payden Us and Great-west
Assuming the 90 days horizon Payden Us is expected to generate 2.78 times less return on investment than Great-west. But when comparing it to its historical volatility, Payden Government Fund is 2.09 times less risky than Great-west. It trades about 0.25 of its potential returns per unit of risk. Great West Government Mortgage is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 801.00 in Great West Government Mortgage on November 30, 2024 and sell it today you would earn a total of 15.00 from holding Great West Government Mortgage or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Payden Government Fund vs. Great West Government Mortgage
Performance |
| Timeline |
| Payden Government |
| Great West Government |
Payden Us and Great-west Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Us and Great-west
The main advantage of trading using opposite Payden Us and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Us position performs unexpectedly, Great-west 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 Great-west will offset losses from the drop in Great-west's long position.| Payden Us vs. Ffcdax | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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