Correlation Between Payden Us and Payden Strategic
Can any of the company-specific risk be diversified away by investing in both Payden Us and Payden Strategic 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 Payden Strategic 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 Payden Strategic Income, you can compare the effects of market volatilities on Payden Us and Payden Strategic 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 Payden Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Us and Payden Strategic.
Diversification Opportunities for Payden Us and Payden Strategic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Payden and Payden is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Payden Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Strategic Income 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 Payden Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Strategic Income has no effect on the direction of Payden Us i.e., Payden Us and Payden Strategic go up and down completely randomly.
Pair Corralation between Payden Us and Payden Strategic
Assuming the 90 days horizon Payden Us is expected to generate 2.43 times less return on investment than Payden Strategic. But when comparing it to its historical volatility, Payden Government Fund is 1.28 times less risky than Payden Strategic. It trades about 0.06 of its potential returns per unit of risk. Payden Strategic Income is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 961.00 in Payden Strategic Income on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Payden Strategic Income or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Payden Strategic Income
Performance |
| Timeline |
| Payden Government |
| Payden Strategic Income |
Payden Us and Payden Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Us and Payden Strategic
The main advantage of trading using opposite Payden Us and Payden Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Us position performs unexpectedly, Payden Strategic 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 Strategic will offset losses from the drop in Payden Strategic's long position.| Payden Us vs. Deutsche Health And | Payden Us vs. Prudential Health Sciences | Payden Us vs. Health Biotchnology Portfolio | Payden Us vs. Blackrock Health Sciences |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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