Correlation Between Voya Prime and Payden Corporate

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

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

Diversification Opportunities for Voya Prime and Payden Corporate

-0.51

Correlation Coefficient

Voya Prime  Payden Corporate

Excellent diversification

The 3 months correlation between Voya and Payden is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Voya Prime Rate and Payden Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Porate Bond and Voya Prime 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 Voya Prime Rate are associated (or correlated) with Payden Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Porate Bond has no effect on the direction of Voya Prime i.e., Voya Prime and Payden Corporate go up and down completely randomly.

Pair Corralation between Voya Prime and Payden Corporate

Assuming the 90 days horizon Voya Prime Rate is expected to generate 1.7 times more return on investment than Payden Corporate. However, Voya Prime is 1.7 times more volatile than Payden Porate Bond. It trades about 0.28 of its potential returns per unit of risk. Payden Porate Bond is currently generating about -0.03 per unit of risk. If you would invest  719.00  in Voya Prime Rate on September 5, 2024 and sell it today you would earn a total of  72.00  from holding Voya Prime Rate or generate 10.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Voya Prime Rate  vs.  Payden Porate Bond

Voya Prime Rate

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Prime Rate are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Prime may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Payden Porate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Voya Prime and Payden Corporate

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

The idea behind Voya Prime Rate and Payden Porate Bond 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.