Correlation Between Ampleforth and Payden Low
Can any of the company-specific risk be diversified away by investing in both Ampleforth and Payden Low 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 Ampleforth and Payden Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampleforth and Payden Low Duration, you can compare the effects of market volatilities on Ampleforth and Payden Low 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 Ampleforth with a short position of Payden Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and Payden Low.
Diversification Opportunities for Ampleforth and Payden Low
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ampleforth and Payden is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and Payden Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Low Duration and Ampleforth 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 Ampleforth are associated (or correlated) with Payden Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Low Duration has no effect on the direction of Ampleforth i.e., Ampleforth and Payden Low go up and down completely randomly.
Pair Corralation between Ampleforth and Payden Low
Assuming the 90 days trading horizon Ampleforth is expected to generate 49.45 times more return on investment than Payden Low. However, Ampleforth is 49.45 times more volatile than Payden Low Duration. It trades about 0.14 of its potential returns per unit of risk. Payden Low Duration is currently generating about 0.05 per unit of risk. If you would invest 118.00 in Ampleforth on September 4, 2024 and sell it today you would earn a total of 16.00 from holding Ampleforth or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ampleforth vs. Payden Low Duration
Performance |
| Timeline |
| Ampleforth |
| Payden Low Duration |
Ampleforth and Payden Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampleforth and Payden Low
The main advantage of trading using opposite Ampleforth and Payden Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampleforth position performs unexpectedly, Payden Low 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 Low will offset losses from the drop in Payden Low's long position.The idea behind Ampleforth and Payden Low Duration 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.| Payden Low vs. Payden Porate Bond | Payden Low vs. Payden Absolute Return | Payden Low vs. Payden Absolute Return | Payden Low vs. Payden Emerging Markets |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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