Correlation Between Permanent Portfolio and Payden Core
Can any of the company-specific risk be diversified away by investing in both Permanent Portfolio and Payden Core 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 Permanent Portfolio and Payden Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permanent Portfolio Class and Payden E Bond, you can compare the effects of market volatilities on Permanent Portfolio and Payden Core 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 Permanent Portfolio with a short position of Payden Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permanent Portfolio and Payden Core.
Diversification Opportunities for Permanent Portfolio and Payden Core
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Permanent and Payden is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Permanent Portfolio Class and Payden E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden E Bond and Permanent Portfolio 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 Permanent Portfolio Class are associated (or correlated) with Payden Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden E Bond has no effect on the direction of Permanent Portfolio i.e., Permanent Portfolio and Payden Core go up and down completely randomly.
Pair Corralation between Permanent Portfolio and Payden Core
Assuming the 90 days horizon Permanent Portfolio Class is expected to generate 1.84 times more return on investment than Payden Core. However, Permanent Portfolio is 1.84 times more volatile than Payden E Bond. It trades about 0.14 of its potential returns per unit of risk. Payden E Bond is currently generating about 0.05 per unit of risk. If you would invest 5,093 in Permanent Portfolio Class on November 7, 2024 and sell it today you would earn a total of 1,129 from holding Permanent Portfolio Class or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Permanent Portfolio Class vs. Payden E Bond
Performance |
| Timeline |
| Permanent Portfolio Class |
| Payden E Bond |
Permanent Portfolio and Payden Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permanent Portfolio and Payden Core
The main advantage of trading using opposite Permanent Portfolio and Payden Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permanent Portfolio position performs unexpectedly, Payden Core 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 Core will offset losses from the drop in Payden Core's long position.| Permanent Portfolio vs. The Fairholme Fund | Permanent Portfolio vs. Fpa Crescent Fund | Permanent Portfolio vs. Amg Yacktman Fund | Permanent Portfolio vs. Hussman Strategic Total |
| Payden Core vs. The Hartford Healthcare | Payden Core vs. Hartford Healthcare Hls | Payden Core vs. Alger Health Sciences | Payden Core vs. Allianzgi Health Sciences |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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