Correlation Between Payden Government and Nationwide Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Payden Government and Nationwide Inflation-protec 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 Nationwide Inflation-protec 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 Nationwide Inflation Protected Securities, you can compare the effects of market volatilities on Payden Government and Nationwide Inflation-protec 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 Nationwide Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Nationwide Inflation-protec.
Diversification Opportunities for Payden Government and Nationwide Inflation-protec
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Nationwide is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Nationwide Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Inflation-protec 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 Nationwide Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Inflation-protec has no effect on the direction of Payden Government i.e., Payden Government and Nationwide Inflation-protec go up and down completely randomly.
Pair Corralation between Payden Government and Nationwide Inflation-protec
Assuming the 90 days horizon Payden Government Fund is expected to under-perform the Nationwide Inflation-protec. But the mutual fund apears to be less risky and, when comparing its historical volatility, Payden Government Fund is 2.16 times less risky than Nationwide Inflation-protec. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Nationwide Inflation Protected Securities is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 891.00 in Nationwide Inflation Protected Securities on October 18, 2024 and sell it today you would lose (4.00) from holding Nationwide Inflation Protected Securities or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Nationwide Inflation Protected
Performance |
| Timeline |
| Payden Government |
| Nationwide Inflation-protec |
Payden Government and Nationwide Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Nationwide Inflation-protec
The main advantage of trading using opposite Payden Government and Nationwide Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government position performs unexpectedly, Nationwide Inflation-protec 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 Nationwide Inflation-protec will offset losses from the drop in Nationwide Inflation-protec's long position.| Payden Government vs. Tax Managed Large Cap | Payden Government vs. Ab Impact Municipal | Payden Government vs. Volumetric Fund Volumetric | Payden Government vs. Fmasx |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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