Correlation Between Forum Real and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Forum Real 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 Forum Real and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Real Estate and Payden Emerging Markets, you can compare the effects of market volatilities on Forum Real 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 Forum Real with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Real and Payden Emerging.
Diversification Opportunities for Forum Real and Payden Emerging
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forum and Payden is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Forum Real Estate 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 Forum Real 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 Forum Real Estate 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 Forum Real i.e., Forum Real and Payden Emerging go up and down completely randomly.
Pair Corralation between Forum Real and Payden Emerging
Assuming the 90 days horizon Forum Real Estate is expected to generate 0.66 times more return on investment than Payden Emerging. However, Forum Real Estate is 1.51 times less risky than Payden Emerging. It trades about 0.41 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.2 per unit of risk. If you would invest 777.00 in Forum Real Estate on December 2, 2024 and sell it today you would earn a total of 191.00 from holding Forum Real Estate or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Real Estate vs. Payden Emerging Markets
Performance |
| Timeline |
| Forum Real Estate |
| Payden Emerging Markets |
Forum Real and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Real and Payden Emerging
The main advantage of trading using opposite Forum Real and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Real 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.| Forum Real vs. Multi Manager High Yield | ||
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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