Correlation Between Payden Government and Northern Global

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

By analyzing existing cross correlation between Payden Government Fund and Northern Global Tactical, you can compare the effects of market volatilities on Payden Government and Northern Global 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 Government with a short position of Northern Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Northern Global.

Diversification Opportunities for Payden Government and Northern Global

0.56

Correlation Coefficient

Payden Government  Northern Global

Very weak diversification

The 3 months correlation between Payden and Northern is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Northern Global Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Global Tactical and Payden Government 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 Government Fund are associated (or correlated) with Northern Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Global Tactical has no effect on the direction of Payden Government i.e., Payden Government and Northern Global go up and down completely randomly.

Pair Corralation between Payden Government and Northern Global

Assuming the 90 days horizon Payden Government Fund is expected to generate 0.18 times more return on investment than Northern Global. However, Payden Government Fund is 5.43 times less risky than Northern Global. It trades about -0.27 of its potential returns per unit of risk. Northern Global Tactical is currently generating about -0.28 per unit of risk. If you would invest  940.00  in Payden Government Fund on October 11, 2024 and sell it today you would lose (6.00) from holding Payden Government Fund or give up 0.64% of portfolio value over 90 days.

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

Payden Government Fund  vs.  Northern Global Tactical

Payden Government

Risk-Adjusted Performance

0 of 100

Very Weak

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

Northern Global Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Global Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Northern Global 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 Government and Northern Global

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

The idea behind Payden Government Fund and Northern Global Tactical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.