Correlation Between Lgm Risk and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Lgm Risk 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 Lgm Risk and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lgm Risk Managed and Payden Absolute Return, you can compare the effects of market volatilities on Lgm Risk 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 Lgm Risk with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgm Risk and Payden Absolute.
Diversification Opportunities for Lgm Risk and Payden Absolute
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lgm and Payden is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed 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 Lgm Risk 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 Lgm Risk Managed 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 Lgm Risk i.e., Lgm Risk and Payden Absolute go up and down completely randomly.
Pair Corralation between Lgm Risk and Payden Absolute
Assuming the 90 days horizon Lgm Risk Managed is expected to generate 4.05 times more return on investment than Payden Absolute. However, Lgm Risk is 4.05 times more volatile than Payden Absolute Return. It trades about 0.16 of its potential returns per unit of risk. Payden Absolute Return is currently generating about 0.18 per unit of risk. If you would invest 1,134 in Lgm Risk Managed on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Lgm Risk Managed or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lgm Risk Managed vs. Payden Absolute Return
Performance |
| Timeline |
| Lgm Risk Managed |
| Payden Absolute Return |
Lgm Risk and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lgm Risk and Payden Absolute
The main advantage of trading using opposite Lgm Risk and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgm Risk 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.| Lgm Risk vs. Shelton Emerging Markets | Lgm Risk vs. Rbc Emerging Markets | Lgm Risk vs. Artisan Emerging Markets | Lgm Risk vs. Barings Emerging Markets |
| Payden Absolute vs. Mesirow Financial Small | Payden Absolute vs. 1919 Financial Services | Payden Absolute vs. Royce Global Financial | Payden Absolute vs. John Hancock Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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