Correlation Between Westwood Largecap and Payden Corporate
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap and Payden Corporate 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 Westwood Largecap and Payden Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Largecap Value and Payden Corporate Bond, you can compare the effects of market volatilities on Westwood Largecap and Payden Corporate 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 Westwood Largecap with a short position of Payden Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Payden Corporate.
Diversification Opportunities for Westwood Largecap and Payden Corporate
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westwood and Payden is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and Payden Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Corporate Bond and Westwood Largecap 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 Westwood Largecap Value are associated (or correlated) with Payden Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Corporate Bond has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and Payden Corporate go up and down completely randomly.
Pair Corralation between Westwood Largecap and Payden Corporate
Assuming the 90 days horizon Westwood Largecap Value is expected to generate 1.94 times more return on investment than Payden Corporate. However, Westwood Largecap is 1.94 times more volatile than Payden Corporate Bond. It trades about 0.13 of its potential returns per unit of risk. Payden Corporate Bond is currently generating about 0.11 per unit of risk. If you would invest 1,392 in Westwood Largecap Value on September 1, 2024 and sell it today you would earn a total of 158.00 from holding Westwood Largecap Value or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Westwood Largecap Value vs. Payden Corporate Bond
Performance |
| Timeline |
| Westwood Largecap Value |
| Payden Corporate Bond |
Westwood Largecap and Payden Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Largecap and Payden Corporate
The main advantage of trading using opposite Westwood Largecap and Payden Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap position performs unexpectedly, Payden Corporate 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 Corporate will offset losses from the drop in Payden Corporate's long position.| Westwood Largecap vs. Morningstar Municipal Bond | Westwood Largecap vs. California High Yield Municipal | Westwood Largecap vs. Blrc Sgy Mnp | Westwood Largecap vs. T Rowe Price |
| Payden Corporate vs. Vanguard Total Stock | Payden Corporate vs. Vanguard 500 Index | Payden Corporate vs. Vanguard Total Stock | Payden Corporate vs. Vanguard Total Stock |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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