Correlation Between Vanguard High-yield and Payden Regal
Can any of the company-specific risk be diversified away by investing in both Vanguard High-yield and Payden Regal 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 Vanguard High-yield and Payden Regal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Yield Porate and The Payden Regal, you can compare the effects of market volatilities on Vanguard High-yield and Payden Regal 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 Vanguard High-yield with a short position of Payden Regal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High-yield and Payden Regal.
Diversification Opportunities for Vanguard High-yield and Payden Regal
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Payden is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Porate and The Payden Regal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Regal and Vanguard High-yield 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 Vanguard High Yield Porate are associated (or correlated) with Payden Regal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Regal has no effect on the direction of Vanguard High-yield i.e., Vanguard High-yield and Payden Regal go up and down completely randomly.
Pair Corralation between Vanguard High-yield and Payden Regal
Assuming the 90 days horizon Vanguard High Yield Porate is expected to generate 0.73 times more return on investment than Payden Regal. However, Vanguard High Yield Porate is 1.36 times less risky than Payden Regal. It trades about 0.19 of its potential returns per unit of risk. The Payden Regal is currently generating about 0.08 per unit of risk. If you would invest 545.00 in Vanguard High Yield Porate on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Vanguard High Yield Porate or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Yield Porate vs. The Payden Regal
Performance |
| Timeline |
| Vanguard High Yield |
| Payden Regal |
Vanguard High-yield and Payden Regal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High-yield and Payden Regal
The main advantage of trading using opposite Vanguard High-yield and Payden Regal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High-yield position performs unexpectedly, Payden Regal 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 Regal will offset losses from the drop in Payden Regal's long position.| Vanguard High-yield vs. Vanguard High Yield Corporate | Vanguard High-yield vs. Blackrock Hi Yld | Vanguard High-yield vs. Blackrock High Yield | Vanguard High-yield vs. Blackrock High Yield |
| Payden Regal vs. Vanguard High Yield Corporate | Payden Regal vs. Vanguard High Yield Porate | Payden Regal vs. Blackrock Hi Yld | Payden Regal vs. Blackrock High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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