Correlation Between Payden E and Payden Rygel

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

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

Diversification Opportunities for Payden E and Payden Rygel

0.92

Correlation Coefficient

Payden E  Payden Rygel

Almost no diversification

The 3 months correlation between Payden and Payden is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Payden E Bond and The Payden Rygel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Rygel and Payden E 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 E Bond 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 Payden E i.e., Payden E and Payden Rygel go up and down completely randomly.

Pair Corralation between Payden E and Payden Rygel

Assuming the 90 days horizon Payden E Bond is expected to under-perform the Payden Rygel. But the mutual fund apears to be less risky and, when comparing its historical volatility, Payden E Bond is 1.23 times less risky than Payden Rygel. The mutual fund trades about -0.15 of its potential returns per unit of risk. The The Payden Rygel is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  987.00  in The Payden Rygel on October 7, 2024 and sell it today you would lose (21.00) from holding The Payden Rygel or give up 2.13% of portfolio value over 90 days.

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

Payden E Bond  vs.  The Payden Rygel

Payden E Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payden E Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Payden E 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

0 of 100

Very Weak

Over the last 90 days The Payden Rygel has generated negative risk-adjusted returns adding no value to fund investors. 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 Payden E and Payden Rygel

The main advantage of trading using opposite Payden E and Payden Rygel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden E 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 Payden E Bond 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.