Correlation Between State Street and Payden High

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

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

Diversification Opportunities for State Street and Payden High

0.99

Correlation Coefficient

State Street  Payden High

No risk reduction

The 3 months correlation between State and Payden is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target 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 State Street 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 State Street Target 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 State Street i.e., State Street and Payden High go up and down completely randomly.

Pair Corralation between State Street and Payden High

Assuming the 90 days horizon State Street Target is expected to generate 1.56 times more return on investment than Payden High. However, State Street is 1.56 times more volatile than Payden High Income. It trades about 0.25 of its potential returns per unit of risk. Payden High Income is currently generating about 0.29 per unit of risk. If you would invest  1,219  in State Street Target on May 3, 2025 and sell it today you would earn a total of  57.00  from holding State Street Target or generate 4.68% return on investment over 90 days.

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

State Street Target  vs.  Payden High Income

State Street Target

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Target are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, State Street 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payden High Income are ranked lower than 22 (%) 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 State Street and Payden High

The main advantage of trading using opposite State Street and Payden High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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 State Street Target 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.