Correlation Between Payden Us and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Payden Us 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 Us 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 Government Fund and Fidelity Advisor Overseas, you can compare the effects of market volatilities on Payden Us 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 Us with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Us and Fidelity Advisor.

Diversification Opportunities for Payden Us and Fidelity Advisor

0.36

Correlation Coefficient

Payden Us  Fidelity Advisor

Weak diversification

The 3 months correlation between Payden and Fidelity is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Fidelity Advisor Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Overseas and Payden Us 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 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 Overseas has no effect on the direction of Payden Us i.e., Payden Us and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Payden Us and Fidelity Advisor

Assuming the 90 days horizon Payden Us is expected to generate 2.59 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Payden Government Fund is 5.11 times less risky than Fidelity Advisor. It trades about 0.06 of its potential returns per unit of risk. Fidelity Advisor Overseas is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,372  in Fidelity Advisor Overseas on October 26, 2024 and sell it today you would earn a total of  42.00  from holding Fidelity Advisor Overseas or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Payden Government Fund  vs.  Fidelity Advisor Overseas

Payden Government

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Government Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Overseas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Overseas 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 Us and Fidelity Advisor

The main advantage of trading using opposite Payden Us and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Us 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 Government Fund and Fidelity Advisor Overseas 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.