Correlation Between Payden Floating and Fidelity Advisor

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

By analyzing existing cross correlation between Payden Floating Rate and Fidelity Advisor Technology, you can compare the effects of market volatilities on Payden Floating and Fidelity Advisor 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 Floating with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Floating and Fidelity Advisor.

Diversification Opportunities for Payden Floating and Fidelity Advisor

0.81

Correlation Coefficient

Payden Floating  Fidelity Advisor

Very poor diversification

The 3 months correlation between Payden and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Payden Floating Rate and Fidelity Advisor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Tec and Payden Floating 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 Floating Rate are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Tec has no effect on the direction of Payden Floating i.e., Payden Floating and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Payden Floating and Fidelity Advisor

Assuming the 90 days horizon Payden Floating Rate is expected to generate 0.05 times more return on investment than Fidelity Advisor. However, Payden Floating Rate is 18.75 times less risky than Fidelity Advisor. It trades about 0.29 of its potential returns per unit of risk. Fidelity Advisor Technology is currently generating about 0.02 per unit of risk. If you would invest  948.00  in Payden Floating Rate on September 29, 2024 and sell it today you would earn a total of  33.00  from holding Payden Floating Rate or generate 3.48% return on investment over 90 days.

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

Payden Floating Rate  vs.  Fidelity Advisor Technology

Payden Floating Rate

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Floating Rate are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Payden Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Tec

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Technology are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Advisor 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 Floating and Fidelity Advisor

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

The idea behind Payden Floating Rate and Fidelity Advisor Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.