Correlation Between Payden Corporate and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Payden Corporate 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 Payden Corporate and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Porate Bond and Payden Emerging Markets, you can compare the effects of market volatilities on Payden Corporate 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 Payden Corporate with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Corporate and Payden Emerging.
Diversification Opportunities for Payden Corporate and Payden Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Payden and Payden is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Payden Porate Bond 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 Payden Corporate 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 Payden Porate Bond 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 Payden Corporate i.e., Payden Corporate and Payden Emerging go up and down completely randomly.
Pair Corralation between Payden Corporate and Payden Emerging
Assuming the 90 days horizon Payden Porate Bond is expected to generate 0.8 times more return on investment than Payden Emerging. However, Payden Porate Bond is 1.26 times less risky than Payden Emerging. It trades about 0.08 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about -0.09 per unit of risk. If you would invest 979.00 in Payden Porate Bond on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Payden Porate Bond or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Porate Bond vs. Payden Emerging Markets
Performance |
| Timeline |
| Payden Porate Bond |
| Payden Emerging Markets |
Payden Corporate and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Corporate and Payden Emerging
The main advantage of trading using opposite Payden Corporate and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Corporate 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.| Payden Corporate vs. Old Westbury Short Term | Payden Corporate vs. Ab Select Longshort | Payden Corporate vs. Angel Oak Ultrashort | Payden Corporate vs. Astor Longshort Fund |
| Payden Emerging vs. Fidelity Managed Retirement | Payden Emerging vs. Target Retirement 2040 | Payden Emerging vs. Blackrock Moderate Prepared | Payden Emerging vs. Wisdomtree Siegel Moderate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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