Correlation Between Mainstay Government and Payden Government
Can any of the company-specific risk be diversified away by investing in both Mainstay Government and Payden Government 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 Mainstay Government and Payden Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Government Fund and Payden Government Fund, you can compare the effects of market volatilities on Mainstay Government and Payden Government 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 Mainstay Government with a short position of Payden Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Government and Payden Government.
Diversification Opportunities for Mainstay Government and Payden Government
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstay and Payden is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Government Fund and Payden Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Government and Mainstay 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 Mainstay Government Fund are associated (or correlated) with Payden Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Government has no effect on the direction of Mainstay Government i.e., Mainstay Government and Payden Government go up and down completely randomly.
Pair Corralation between Mainstay Government and Payden Government
Assuming the 90 days horizon Mainstay Government Fund is expected to under-perform the Payden Government. In addition to that, Mainstay Government is 2.15 times more volatile than Payden Government Fund. It trades about -0.11 of its total potential returns per unit of risk. Payden Government Fund is currently generating about -0.08 per unit of volatility. If you would invest 928.00 in Payden Government Fund on January 18, 2024 and sell it today you would lose (3.00) from holding Payden Government Fund or give up 0.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mainstay Government Fund vs. Payden Government Fund
Performance |
Timeline |
Mainstay Government |
Payden Government |
Mainstay Government and Payden Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mainstay Government and Payden Government
The main advantage of trading using opposite Mainstay Government and Payden Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Government position performs unexpectedly, Payden Government 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 Government will offset losses from the drop in Payden Government's long position.Mainstay Government vs. Mainstay High Yield | Mainstay Government vs. Mainstay Tax Free | Mainstay Government vs. Mainstay Income Builder | Mainstay Government vs. Mainstay Large Cap |
Payden Government vs. Payden Porate Bond | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Emerging Markets |
Check out your portfolio center.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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