Correlation Between Payden Government and Sit Government
Can any of the company-specific risk be diversified away by investing in both Payden Government and Sit Government 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 Sit Government 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 Sit Government Securities, you can compare the effects of market volatilities on Payden Government and Sit Government 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 Sit Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Sit Government.
Diversification Opportunities for Payden Government and Sit Government
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Payden and Sit is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Sit Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Government Securities 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 Sit Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Government Securities has no effect on the direction of Payden Government i.e., Payden Government and Sit Government go up and down completely randomly.
Pair Corralation between Payden Government and Sit Government
Assuming the 90 days horizon Payden Government is expected to generate 1.47 times less return on investment than Sit Government. But when comparing it to its historical volatility, Payden Government Fund is 1.76 times less risky than Sit Government. It trades about 0.23 of its potential returns per unit of risk. Sit Government Securities is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,019 in Sit Government Securities on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Sit Government Securities or generate 0.79% 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. Sit Government Securities
Performance |
| Timeline |
| Payden Government |
| Sit Government Securities |
Payden Government and Sit Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Sit Government
The main advantage of trading using opposite Payden Government and Sit Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government position performs unexpectedly, Sit Government 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 Sit Government will offset losses from the drop in Sit Government's long position.| Payden Government vs. Payden Porate Bond | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Emerging Markets |
| Sit Government vs. Sit Small Cap | Sit Government vs. Sit Global Dividend | Sit Government vs. Sit Global Dividend | Sit Government vs. Sit Small Cap |
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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