Correlation Between Moderate Balanced and Payden Regal

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

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

Diversification Opportunities for Moderate Balanced and Payden Regal

0.1

Correlation Coefficient

Moderate Balanced  Payden Regal

Average diversification

The 3 months correlation between Moderate and Payden is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation and The Payden Regal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Regal and Moderate Balanced 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 Moderate Balanced Allocation are associated (or correlated) with Payden Regal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Regal has no effect on the direction of Moderate Balanced i.e., Moderate Balanced and Payden Regal go up and down completely randomly.

Pair Corralation between Moderate Balanced and Payden Regal

Assuming the 90 days horizon Moderate Balanced Allocation is expected to under-perform the Payden Regal. In addition to that, Moderate Balanced is 3.62 times more volatile than The Payden Regal. It trades about -0.06 of its total potential returns per unit of risk. The Payden Regal is currently generating about 0.15 per unit of volatility. If you would invest  620.00  in The Payden Regal on December 22, 2024 and sell it today you would earn a total of  10.00  from holding The Payden Regal or generate 1.61% return on investment over 90 days.

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

Moderate Balanced Allocation  vs.  The Payden Regal

Moderate Balanced

Risk-Adjusted Performance

Very Weak

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

Payden Regal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Payden Regal are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Payden Regal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moderate Balanced and Payden Regal

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

The idea behind Moderate Balanced Allocation and The Payden Regal 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.