Correlation Between Applied Finance and Payden Strategic
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Payden Strategic 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 Applied Finance and Payden Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Payden Strategic Income, you can compare the effects of market volatilities on Applied Finance and Payden Strategic 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 Applied Finance with a short position of Payden Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Payden Strategic.
Diversification Opportunities for Applied Finance and Payden Strategic
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Applied and Payden is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Payden Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Strategic Income and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Payden Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Strategic Income has no effect on the direction of Applied Finance i.e., Applied Finance and Payden Strategic go up and down completely randomly.
Pair Corralation between Applied Finance and Payden Strategic
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 7.49 times more return on investment than Payden Strategic. However, Applied Finance is 7.49 times more volatile than Payden Strategic Income. It trades about 0.2 of its potential returns per unit of risk. Payden Strategic Income is currently generating about 0.24 per unit of risk. If you would invest 2,096 in Applied Finance Explorer on June 4, 2025 and sell it today you would earn a total of 285.00 from holding Applied Finance Explorer or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Payden Strategic Income
Performance |
| Timeline |
| Applied Finance Explorer |
| Payden Strategic Income |
Applied Finance and Payden Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Payden Strategic
The main advantage of trading using opposite Applied Finance and Payden Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Payden Strategic 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 Strategic will offset losses from the drop in Payden Strategic's long position.| Applied Finance vs. Vanguard Small Cap Value | Applied Finance vs. Vanguard Small Cap Value | Applied Finance vs. Us Small Cap | Applied Finance vs. Us Targeted Value |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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