Correlation Between NYSE Composite and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Payden Absolute Return, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Payden Absolute.
Diversification Opportunities for NYSE Composite and Payden Absolute
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Payden is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Payden Absolute go up and down completely randomly.
Pair Corralation between NYSE Composite and Payden Absolute
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.04 times more return on investment than Payden Absolute. However, NYSE Composite is 3.04 times more volatile than Payden Absolute Return. It trades about 0.42 of its potential returns per unit of risk. Payden Absolute Return is currently generating about -0.13 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Payden Absolute Return
Performance |
| Timeline |
NYSE Composite and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Payden Absolute Return
Pair trading matchups for Payden Absolute
Pair Trading with NYSE Composite and Payden Absolute
The main advantage of trading using opposite NYSE Composite and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Payden Absolute vs. Jhancock Disciplined Value | Payden Absolute vs. Americafirst Large Cap | Payden Absolute vs. Aqr Large Cap | Payden Absolute vs. Dunham Large Cap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |