Correlation Between Western Assets and Payden Core
Can any of the company-specific risk be diversified away by investing in both Western Assets and Payden Core 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 Western Assets and Payden Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Payden Core Bond, you can compare the effects of market volatilities on Western Assets and Payden Core 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 Western Assets with a short position of Payden Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Payden Core.
Diversification Opportunities for Western Assets and Payden Core
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Payden is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Payden Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Core Bond and Western Assets 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 Western Assets Emerging are associated (or correlated) with Payden Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Core Bond has no effect on the direction of Western Assets i.e., Western Assets and Payden Core go up and down completely randomly.
Pair Corralation between Western Assets and Payden Core
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.01 times more return on investment than Payden Core. However, Western Assets is 1.01 times more volatile than Payden Core Bond. It trades about 0.17 of its potential returns per unit of risk. Payden Core Bond is currently generating about 0.07 per unit of risk. If you would invest 1,059 in Western Assets Emerging on October 23, 2024 and sell it today you would earn a total of 9.00 from holding Western Assets Emerging or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Payden Core Bond
Performance |
| Timeline |
| Western Assets Emerging |
| Payden Core Bond |
Western Assets and Payden Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Payden Core
The main advantage of trading using opposite Western Assets and Payden Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Payden Core 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 Core will offset losses from the drop in Payden Core's long position.| Western Assets vs. Siit High Yield | Western Assets vs. Versatile Bond Portfolio | Western Assets vs. Gmo High Yield | Western Assets vs. Blrc Sgy Mnp |
| Payden Core vs. Delaware Emerging Markets | Payden Core vs. Western Assets Emerging | Payden Core vs. Alphacentric Symmetry Strategy | Payden Core vs. Angel Oak Multi Strategy |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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