Correlation Between Payden Corporate and Payden/kravitz Cash

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

By analyzing existing cross correlation between Payden Porate Bond and Paydenkravitz Cash Balance, you can compare the effects of market volatilities on Payden Corporate and Payden/kravitz Cash 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 Payden Corporate with a short position of Payden/kravitz Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Corporate and Payden/kravitz Cash.

Diversification Opportunities for Payden Corporate and Payden/kravitz Cash

-0.69

Correlation Coefficient

Payden Corporate  Payden/kravitz Cash

Excellent diversification

The 3 months correlation between Payden and Payden/kravitz is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Payden Porate Bond and Paydenkravitz Cash Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden/kravitz Cash and Payden Corporate 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 Payden Porate Bond are associated (or correlated) with Payden/kravitz Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden/kravitz Cash has no effect on the direction of Payden Corporate i.e., Payden Corporate and Payden/kravitz Cash go up and down completely randomly.

Pair Corralation between Payden Corporate and Payden/kravitz Cash

Assuming the 90 days horizon Payden Porate Bond is expected to under-perform the Payden/kravitz Cash. In addition to that, Payden Corporate is 4.06 times more volatile than Paydenkravitz Cash Balance. It trades about -0.04 of its total potential returns per unit of risk. Paydenkravitz Cash Balance is currently generating about 0.4 per unit of volatility. If you would invest  1,010  in Paydenkravitz Cash Balance on September 10, 2024 and sell it today you would earn a total of  21.00  from holding Paydenkravitz Cash Balance or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Payden Porate Bond  vs.  Paydenkravitz Cash Balance

Payden Porate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Payden/kravitz Cash

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Paydenkravitz Cash Balance are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Payden/kravitz Cash is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Payden Corporate and Payden/kravitz Cash

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

The idea behind Payden Porate Bond and Paydenkravitz Cash Balance 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.