Correlation Between Goldman Sachs and Payden High

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

By analyzing existing cross correlation between Goldman Sachs Clean and Payden High Income, you can compare the effects of market volatilities on Goldman Sachs and Payden High 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 Goldman Sachs with a short position of Payden High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Payden High.

Diversification Opportunities for Goldman Sachs and Payden High

0.23

Correlation Coefficient

Goldman Sachs  Payden High

Modest diversification

The 3 months correlation between Goldman and Payden is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Payden High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden High Income and Goldman Sachs 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 Goldman Sachs Clean are associated (or correlated) with Payden High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden High Income has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Payden High go up and down completely randomly.

Pair Corralation between Goldman Sachs and Payden High

Assuming the 90 days horizon Goldman Sachs is expected to generate 4.5 times less return on investment than Payden High. In addition to that, Goldman Sachs is 6.33 times more volatile than Payden High Income. It trades about 0.01 of its total potential returns per unit of risk. Payden High Income is currently generating about 0.19 per unit of volatility. If you would invest  574.00  in Payden High Income on October 6, 2024 and sell it today you would earn a total of  61.00  from holding Payden High Income or generate 10.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.0%
Values	Daily Returns

Goldman Sachs Clean  vs.  Payden High Income

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Payden High Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goldman Sachs and Payden High

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

The idea behind Goldman Sachs Clean and Payden High Income 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.