Correlation Between Elfun Government and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Elfun Government 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 Elfun Government and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and Payden Absolute Return, you can compare the effects of market volatilities on Elfun Government 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 Elfun Government with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and Payden Absolute.
Diversification Opportunities for Elfun Government and Payden Absolute
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elfun and Payden is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money 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 Elfun Government 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 Elfun Government Money 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 Elfun Government i.e., Elfun Government and Payden Absolute go up and down completely randomly.
Pair Corralation between Elfun Government and Payden Absolute
Assuming the 90 days horizon Elfun Government is expected to generate 1.59 times less return on investment than Payden Absolute. In addition to that, Elfun Government is 2.21 times more volatile than Payden Absolute Return. It trades about 0.08 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.28 per unit of volatility. If you would invest 892.00 in Payden Absolute Return on September 14, 2024 and sell it today you would earn a total of 59.00 from holding Payden Absolute Return or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Elfun Government Money vs. Payden Absolute Return
Performance |
| Timeline |
| Elfun Government Money |
| Payden Absolute Return |
Elfun Government and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Government and Payden Absolute
The main advantage of trading using opposite Elfun Government and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government 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.| Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard 500 Index | Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard Total Stock |
| Payden Absolute vs. Vanguard Total Stock | Payden Absolute vs. Vanguard 500 Index | Payden Absolute vs. Vanguard Total Stock | Payden Absolute vs. Vanguard Total Stock |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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