Correlation Between Payden High and Small Company

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

By analyzing existing cross correlation between Payden High Income and Small Pany Growth, you can compare the effects of market volatilities on Payden High and Small Company 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 High with a short position of Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden High and Small Company.

Diversification Opportunities for Payden High and Small Company

0.88

Correlation Coefficient

Payden High  Small Company

Very poor diversification

The 3 months correlation between Payden and Small is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Payden High Income and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Payden High 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 High Income are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Payden High i.e., Payden High and Small Company go up and down completely randomly.

Pair Corralation between Payden High and Small Company

Assuming the 90 days horizon Payden High Income is expected to generate 24.46 times more return on investment than Small Company. However, Payden High is 24.46 times more volatile than Small Pany Growth. It trades about 0.05 of its potential returns per unit of risk. Small Pany Growth is currently generating about 0.04 per unit of risk. If you would invest  132.00  in Payden High Income on July 2, 2025 and sell it today you would earn a total of  1,158  from holding Payden High Income or generate 877.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	92.7%
Values	Daily Returns

Payden High Income  vs.  Small Pany Growth

Payden High Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Payden High Income are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Payden High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Pany Growth

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Growth are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Small Company 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 High and Small Company

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

The idea behind Payden High Income and Small Pany Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.