Correlation Between Payden Limited and Short-term Treasury

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

By analyzing existing cross correlation between Payden Limited Maturity and Short Term Treasury Portfolio, you can compare the effects of market volatilities on Payden Limited and Short-term Treasury 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 Limited with a short position of Short-term Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Limited and Short-term Treasury.

Diversification Opportunities for Payden Limited and Short-term Treasury

0.08

Correlation Coefficient

Payden Limited  Short-term Treasury

Significant diversification

The 3 months correlation between Payden and Short-term is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Payden Limited Maturity and Short Term Treasury Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Treasury and Payden Limited 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 Limited Maturity are associated (or correlated) with Short-term Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Treasury has no effect on the direction of Payden Limited i.e., Payden Limited and Short-term Treasury go up and down completely randomly.

Pair Corralation between Payden Limited and Short-term Treasury

If you would invest  6,655  in Short Term Treasury Portfolio on September 5, 2024 and sell it today you would earn a total of  17.00  from holding Short Term Treasury Portfolio or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Payden Limited Maturity  vs.  Short Term Treasury Portfolio

Payden Limited Maturity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Limited Maturity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Payden Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Term Treasury

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Treasury Portfolio are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Short-term Treasury 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 Limited and Short-term Treasury

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

The idea behind Payden Limited Maturity and Short Term Treasury Portfolio 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.