Correlation Between Us Government and Payden High

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

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

Diversification Opportunities for Us Government and Payden High

0.47

Correlation Coefficient

Us Government  Payden High

Very weak diversification

The 3 months correlation between RGVCX and Payden is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Payden High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden High Income and Us 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 Us Government Securities are associated (or correlated) with Payden High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden High Income has no effect on the direction of Us Government i.e., Us Government and Payden High go up and down completely randomly.

Pair Corralation between Us Government and Payden High

Assuming the 90 days horizon Us Government is expected to generate 2.23 times less return on investment than Payden High. In addition to that, Us Government is 2.0 times more volatile than Payden High Income. It trades about 0.09 of its total potential returns per unit of risk. Payden High Income is currently generating about 0.4 per unit of volatility. If you would invest  1,221  in Payden High Income on May 8, 2025 and sell it today you would earn a total of  52.00  from holding Payden High Income or generate 4.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Us Government Securities  vs.  Payden High Income

Us Government Securities

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Us Government Securities are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Us Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden High Income

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Payden High Income are ranked lower than 31 (%) 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.

Pair Trading with Us Government and Payden High

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

The idea behind Us Government Securities and Payden High Income 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.