Correlation Between Auer Growth and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Auer Growth and Payden Emerging 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 Auer Growth and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auer Growth Fund and Payden Emerging Markets, you can compare the effects of market volatilities on Auer Growth and Payden Emerging 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 Auer Growth with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auer Growth and Payden Emerging.
Diversification Opportunities for Auer Growth and Payden Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auer and Payden is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets and Auer Growth 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 Auer Growth Fund are associated (or correlated) with Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Auer Growth i.e., Auer Growth and Payden Emerging go up and down completely randomly.
Pair Corralation between Auer Growth and Payden Emerging
Assuming the 90 days horizon Auer Growth Fund is expected to generate 2.78 times more return on investment than Payden Emerging. However, Auer Growth is 2.78 times more volatile than Payden Emerging Markets. It trades about 0.26 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.12 per unit of risk. If you would invest 1,680 in Auer Growth Fund on September 3, 2024 and sell it today you would earn a total of 88.00 from holding Auer Growth Fund or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auer Growth Fund vs. Payden Emerging Markets
Performance |
| Timeline |
| Auer Growth Fund |
| Payden Emerging Markets |
Auer Growth and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auer Growth and Payden Emerging
The main advantage of trading using opposite Auer Growth and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auer Growth position performs unexpectedly, Payden Emerging 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 Emerging will offset losses from the drop in Payden Emerging's long position.| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
| Payden Emerging vs. Auer Growth Fund | Payden Emerging vs. Qs Growth Fund | Payden Emerging vs. Eic Value Fund | Payden Emerging vs. Issachar Fund Class |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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