Correlation Between Payden Gnma and World Ex

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

By analyzing existing cross correlation between Payden Gnma Fund and World Ex Core, you can compare the effects of market volatilities on Payden Gnma and World Ex 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 Gnma with a short position of World Ex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Gnma and World Ex.

Diversification Opportunities for Payden Gnma and World Ex

0.35

Correlation Coefficient

Payden Gnma  World Ex

Weak diversification

The 3 months correlation between Payden and World is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Payden Gnma Fund and World Ex Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Ex Core and Payden Gnma 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 Gnma Fund are associated (or correlated) with World Ex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Ex Core has no effect on the direction of Payden Gnma i.e., Payden Gnma and World Ex go up and down completely randomly.

Pair Corralation between Payden Gnma and World Ex

Assuming the 90 days horizon Payden Gnma is expected to generate 10.05 times less return on investment than World Ex. But when comparing it to its historical volatility, Payden Gnma Fund is 3.31 times less risky than World Ex. It trades about 0.03 of its potential returns per unit of risk. World Ex Core is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,607  in World Ex Core on September 10, 2025 and sell it today you would earn a total of  63.00  from holding World Ex Core or generate 3.92% return on investment over 90 days.

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

Payden Gnma Fund  vs.  World Ex Core

Payden Gnma Fund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Gnma Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden Gnma is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

World Ex Core

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in World Ex Core are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, World Ex 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 Gnma and World Ex

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

The idea behind Payden Gnma Fund and World Ex Core 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.