Correlation Between Pace International and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Pace International and Payden Floating 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 Pace International and Payden Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace International Emerging and Payden Floating Rate, you can compare the effects of market volatilities on Pace International and Payden Floating 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 Pace International with a short position of Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Payden Floating.
Diversification Opportunities for Pace International and Payden Floating
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pace and Payden is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate and Pace International 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 Pace International Emerging are associated (or correlated) with Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Pace International i.e., Pace International and Payden Floating go up and down completely randomly.
Pair Corralation between Pace International and Payden Floating
Assuming the 90 days horizon Pace International Emerging is expected to generate 13.25 times more return on investment than Payden Floating. However, Pace International is 13.25 times more volatile than Payden Floating Rate. It trades about 0.05 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.57 per unit of risk. If you would invest 1,210 in Pace International Emerging on August 25, 2024 and sell it today you would earn a total of 122.00 from holding Pace International Emerging or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Emerging vs. Payden Floating Rate
Performance |
| Timeline |
| Pace International |
| Payden Floating Rate |
Pace International and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Payden Floating
The main advantage of trading using opposite Pace International and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Payden Floating 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 Floating will offset losses from the drop in Payden Floating's long position.| Pace International vs. Short Intermediate Bond Fund | Pace International vs. Siit Ultra Short | Pace International vs. Quantitative Longshort Equity | Pace International vs. Rbc Short Duration |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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