Correlation Between Mid Cap and Payden Government
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Payden 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 Mid Cap and Payden Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Payden Government Fund, you can compare the effects of market volatilities on Mid Cap and Payden 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 Mid Cap with a short position of Payden Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Payden Government.
Diversification Opportunities for Mid Cap and Payden Government
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mid and Payden is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Payden Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Government and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Payden Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Government has no effect on the direction of Mid Cap i.e., Mid Cap and Payden Government go up and down completely randomly.
Pair Corralation between Mid Cap and Payden Government
Assuming the 90 days horizon Mid Cap Growth is expected to generate 5.32 times more return on investment than Payden Government. However, Mid Cap is 5.32 times more volatile than Payden Government Fund. It trades about 0.06 of its potential returns per unit of risk. Payden Government Fund is currently generating about 0.08 per unit of risk. If you would invest 3,040 in Mid Cap Growth on November 6, 2024 and sell it today you would earn a total of 1,013 from holding Mid Cap Growth or generate 33.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Payden Government Fund
Performance |
| Timeline |
| Mid Cap Growth |
| Payden Government |
Mid Cap and Payden Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Payden Government
The main advantage of trading using opposite Mid Cap and Payden Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Payden 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 Payden Government will offset losses from the drop in Payden Government's long position.| Mid Cap vs. Touchstone Sustainability And | Mid Cap vs. Growth Opportunities Fund | Mid Cap vs. Total Return Fund | Mid Cap vs. William Blair International |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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