Correlation Between Payden Absolute and Cullen International
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Cullen International 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 Absolute and Cullen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Absolute Return and Cullen International High, you can compare the effects of market volatilities on Payden Absolute and Cullen International 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 Absolute with a short position of Cullen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Cullen International.
Diversification Opportunities for Payden Absolute and Cullen International
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Cullen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Cullen International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen International High and Payden Absolute 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 Absolute Return are associated (or correlated) with Cullen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen International High has no effect on the direction of Payden Absolute i.e., Payden Absolute and Cullen International go up and down completely randomly.
Pair Corralation between Payden Absolute and Cullen International
Assuming the 90 days horizon Payden Absolute Return is expected to generate 0.29 times more return on investment than Cullen International. However, Payden Absolute Return is 3.41 times less risky than Cullen International. It trades about -0.12 of its potential returns per unit of risk. Cullen International High is currently generating about -0.11 per unit of risk. If you would invest 951.00 in Payden Absolute Return on August 30, 2024 and sell it today you would lose (5.00) from holding Payden Absolute Return or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Cullen International High
Performance |
| Timeline |
| Payden Absolute Return |
| Cullen International High |
Payden Absolute and Cullen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Cullen International
The main advantage of trading using opposite Payden Absolute and Cullen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Cullen International 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 Cullen International will offset losses from the drop in Cullen International's long position.| Payden Absolute vs. Artisan High Income | Payden Absolute vs. Prudential High Yield | Payden Absolute vs. Blackrock High Yield | Payden Absolute vs. Victory High Yield |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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