Correlation Between American Funds and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Payden Absolute Return, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Payden Absolute.
Diversification Opportunities for American Funds and Payden Absolute
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Payden is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental 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 American Funds 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 American Funds Fundamental 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 American Funds i.e., American Funds and Payden Absolute go up and down completely randomly.
Pair Corralation between American Funds and Payden Absolute
Assuming the 90 days horizon American Funds Fundamental is expected to generate 13.75 times more return on investment than Payden Absolute. However, American Funds is 13.75 times more volatile than Payden Absolute Return. It trades about 0.06 of its potential returns per unit of risk. Payden Absolute Return is currently generating about 0.32 per unit of risk. If you would invest 7,352 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 1,066 from holding American Funds Fundamental or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Payden Absolute Return
Performance |
| Timeline |
| American Funds Funda |
| Payden Absolute Return |
American Funds and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Payden Absolute
The main advantage of trading using opposite American Funds and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Federated Emerging Market | American Funds vs. Siit Emerging Markets | American Funds vs. Mid Cap 15x Strategy | American Funds vs. Ashmore Emerging Markets |
| Payden Absolute vs. Health Care Ultrasector | Payden Absolute vs. Live Oak Health | Payden Absolute vs. Hartford Healthcare Hls | Payden Absolute vs. Lord Abbett Health |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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