Correlation Between Fixed Income and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Fixed Income 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 Fixed Income and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Fixed Income and Payden Emerging Markets, you can compare the effects of market volatilities on Fixed Income 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 Fixed Income with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fixed Income and Payden Emerging.
Diversification Opportunities for Fixed Income and Payden Emerging
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fixed and Payden is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Fixed Income 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 Fixed Income 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 The Fixed Income 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 Fixed Income i.e., Fixed Income and Payden Emerging go up and down completely randomly.
Pair Corralation between Fixed Income and Payden Emerging
Assuming the 90 days horizon The Fixed Income is expected to generate 2.02 times more return on investment than Payden Emerging. However, Fixed Income is 2.02 times more volatile than Payden Emerging Markets. It trades about 0.38 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.47 per unit of risk. If you would invest 734.00 in The Fixed Income on September 13, 2024 and sell it today you would earn a total of 11.00 from holding The Fixed Income or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fixed Income vs. Payden Emerging Markets
Performance |
| Timeline |
| Fixed Income |
| Payden Emerging Markets |
Fixed Income and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fixed Income and Payden Emerging
The main advantage of trading using opposite Fixed Income and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fixed Income 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.| Fixed Income vs. T Rowe Price | Fixed Income vs. Oklahoma Municipal Fund | Fixed Income vs. Pace Municipal Fixed | Fixed Income vs. Ab Impact Municipal |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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