Correlation Between State Street and Payden Global
Can any of the company-specific risk be diversified away by investing in both State Street and Payden Global 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 State Street and Payden Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Premier and Payden Global Fixed, you can compare the effects of market volatilities on State Street and Payden Global 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 State Street with a short position of Payden Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Payden Global.
Diversification Opportunities for State Street and Payden Global
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Payden is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Payden Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Global Fixed and State Street 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 State Street Premier are associated (or correlated) with Payden Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Global Fixed has no effect on the direction of State Street i.e., State Street and Payden Global go up and down completely randomly.
Pair Corralation between State Street and Payden Global
Assuming the 90 days horizon State Street Premier is expected to generate 4.5 times more return on investment than Payden Global. However, State Street is 4.5 times more volatile than Payden Global Fixed. It trades about 0.22 of its potential returns per unit of risk. Payden Global Fixed is currently generating about 0.25 per unit of risk. If you would invest 13,727 in State Street Premier on September 1, 2024 and sell it today you would earn a total of 636.00 from holding State Street Premier or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Premier vs. Payden Global Fixed
Performance |
| Timeline |
| State Street Premier |
| Payden Global Fixed |
State Street and Payden Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Payden Global
The main advantage of trading using opposite State Street and Payden Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Payden Global 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 Global will offset losses from the drop in Payden Global's long position.| State Street vs. Goldman Sachs Esg | State Street vs. Invesco Gold Special | State Street vs. Gold And Precious | State Street vs. Oppenheimer Gold Special |
| Payden Global vs. Small Pany Growth | Payden Global vs. Legg Mason Partners | Payden Global vs. L Abbett Growth | Payden Global vs. T Rowe Price |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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