Correlation Between Champlain Mid and Payden Rygel

Can any of the company-specific risk be diversified away by investing in both Champlain Mid and Payden Rygel 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 Champlain Mid and Payden Rygel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champlain Mid Cap and The Payden Rygel, you can compare the effects of market volatilities on Champlain Mid and Payden Rygel 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 Champlain Mid with a short position of Payden Rygel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Mid and Payden Rygel.

Diversification Opportunities for Champlain Mid and Payden Rygel

-0.03

Correlation Coefficient

Champlain Mid  Payden Rygel

Good diversification

The 3 months correlation between Champlain and Payden is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and The Payden Rygel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Rygel and Champlain Mid 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 Champlain Mid Cap are associated (or correlated) with Payden Rygel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Rygel has no effect on the direction of Champlain Mid i.e., Champlain Mid and Payden Rygel go up and down completely randomly.

Pair Corralation between Champlain Mid and Payden Rygel

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Payden Rygel. In addition to that, Champlain Mid is 3.23 times more volatile than The Payden Rygel. It trades about -0.09 of its total potential returns per unit of risk. The Payden Rygel is currently generating about 0.15 per unit of volatility. If you would invest  957.00  in The Payden Rygel on December 22, 2024 and sell it today you would earn a total of  26.00  from holding The Payden Rygel or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Champlain Mid Cap  vs.  The Payden Rygel

Champlain Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Champlain Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden Rygel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Payden Rygel are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden Rygel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Champlain Mid and Payden Rygel

The main advantage of trading using opposite Champlain Mid and Payden Rygel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Mid position performs unexpectedly, Payden Rygel 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 Rygel will offset losses from the drop in Payden Rygel's long position.

The idea behind Champlain Mid Cap and The Payden Rygel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.