Correlation Between Target Retirement and Payden Strategic
Can any of the company-specific risk be diversified away by investing in both Target Retirement 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 Target Retirement and Payden Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and Payden Strategic Income, you can compare the effects of market volatilities on Target Retirement 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 Target Retirement with a short position of Payden Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Payden Strategic.
Diversification Opportunities for Target Retirement and Payden Strategic
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Target and Payden is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 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 Target Retirement 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 Target Retirement 2040 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 Target Retirement i.e., Target Retirement and Payden Strategic go up and down completely randomly.
Pair Corralation between Target Retirement and Payden Strategic
Assuming the 90 days horizon Target Retirement 2040 is expected to generate 3.42 times more return on investment than Payden Strategic. However, Target Retirement is 3.42 times more volatile than Payden Strategic Income. It trades about 0.07 of its potential returns per unit of risk. Payden Strategic Income is currently generating about 0.13 per unit of risk. If you would invest 1,193 in Target Retirement 2040 on November 3, 2024 and sell it today you would earn a total of 137.00 from holding Target Retirement 2040 or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Retirement 2040 vs. Payden Strategic Income
Performance |
| Timeline |
| Target Retirement 2040 |
| Payden Strategic Income |
Target Retirement and Payden Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and Payden Strategic
The main advantage of trading using opposite Target Retirement and Payden Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement 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.| Target Retirement vs. Federated High Yield | Target Retirement vs. Msift High Yield | Target Retirement vs. Buffalo High Yield | Target Retirement vs. Prudential High Yield |
| Payden Strategic vs. Voya Target Retirement | Payden Strategic vs. Franklin Lifesmart Retirement | Payden Strategic vs. Voya Retirement Servative | Payden Strategic vs. Franklin Lifesmart Retirement |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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