Correlation Between Global Gold and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Global Gold and Payden Absolute 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 Global Gold and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Payden Absolute Return, you can compare the effects of market volatilities on Global Gold and Payden Absolute 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 Global Gold with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Payden Absolute.
Diversification Opportunities for Global Gold and Payden Absolute
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Payden is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Payden Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Absolute Return and Global Gold 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 Global Gold Fund are associated (or correlated) with Payden Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Absolute Return has no effect on the direction of Global Gold i.e., Global Gold and Payden Absolute go up and down completely randomly.
Pair Corralation between Global Gold and Payden Absolute
Assuming the 90 days horizon Global Gold Fund is expected to generate 19.9 times more return on investment than Payden Absolute. However, Global Gold is 19.9 times more volatile than Payden Absolute Return. It trades about 0.04 of its potential returns per unit of risk. Payden Absolute Return is currently generating about 0.27 per unit of risk. If you would invest 974.00 in Global Gold Fund on September 4, 2024 and sell it today you would earn a total of 312.00 from holding Global Gold Fund or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 51.01% |
| Values | Daily Returns |
Global Gold Fund vs. Payden Absolute Return
Performance |
| Timeline |
| Global Gold Fund |
| Payden Absolute Return |
Global Gold and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Payden Absolute
The main advantage of trading using opposite Global Gold and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Payden Absolute 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 Absolute will offset losses from the drop in Payden Absolute's long position.| Global Gold vs. Oklahoma College Savings | Global Gold vs. Barings Emerging Markets | Global Gold vs. Artisan Emerging Markets | Global Gold vs. Transamerica Emerging Markets |
| Payden Absolute vs. Rbb Fund | Payden Absolute vs. Volumetric Fund Volumetric | Payden Absolute vs. Principal Lifetime Hybrid | Payden Absolute vs. Artisan Thematic Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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