Correlation Between Payden Us and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both Payden Us and Wells Fargo 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 Wells Fargo 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 Wells Fargo Ultra, you can compare the effects of market volatilities on Payden Us and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Us and Wells Fargo.

Diversification Opportunities for Payden Us and Wells Fargo

PaydenWellsDiversified AwayPaydenWellsDiversified Away100%
0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Payden and Wells is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Wells Fargo Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Ultra 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Ultra has no effect on the direction of Payden Us i.e., Payden Us and Wells Fargo go up and down completely randomly.

Pair Corralation between Payden Us and Wells Fargo

Assuming the 90 days horizon Payden Government Fund is expected to generate 1.45 times more return on investment than Wells Fargo. However, Payden Us is 1.45 times more volatile than Wells Fargo Ultra. It trades about 0.18 of its potential returns per unit of risk. Wells Fargo Ultra is currently generating about 0.15 per unit of risk. If you would invest  936.00  in Payden Government Fund on December 2, 2024 and sell it today you would earn a total of  9.00  from holding Payden Government Fund or generate 0.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Payden Government Fund  vs.  Wells Fargo Ultra

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0.20.40.60.81.01.21.4
JavaScript chart by amCharts 3.21.15PYUSX SADAX
       Timeline  
Payden Government 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Payden Government Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar9.329.349.369.389.49.429.449.46
Wells Fargo Ultra 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Ultra are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar8.758.768.778.788.798.88.818.828.838.84

Payden Us and Wells Fargo Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.36-0.16-0.0749-0.0374-0.0018710.03520.07660.180.380.58 10203040
JavaScript chart by amCharts 3.21.15PYUSX SADAX
       Returns  

Pair Trading with Payden Us and Wells Fargo

The main advantage of trading using opposite Payden Us and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Us position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.
The idea behind Payden Government Fund and Wells Fargo Ultra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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