Correlation Between Payden Absolute and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs International, you can compare the effects of market volatilities on Payden Absolute and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Goldman Sachs.
Diversification Opportunities for Payden Absolute and Goldman Sachs
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Goldman is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Intern has no effect on the direction of Payden Absolute i.e., Payden Absolute and Goldman Sachs go up and down completely randomly.
Pair Corralation between Payden Absolute and Goldman Sachs
Assuming the 90 days horizon Payden Absolute is expected to generate 1.46 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Payden Absolute Return is 10.93 times less risky than Goldman Sachs. It trades about 0.41 of its potential returns per unit of risk. Goldman Sachs International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,268 in Goldman Sachs International on August 24, 2024 and sell it today you would earn a total of 136.00 from holding Goldman Sachs International or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Payden Absolute Return vs. Goldman Sachs International
Performance |
| Timeline |
| Payden Absolute Return |
| Goldman Sachs Intern |
Payden Absolute and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Goldman Sachs
The main advantage of trading using opposite Payden Absolute and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Payden Absolute vs. Needham Aggressive Growth | Payden Absolute vs. Lgm Risk Managed | Payden Absolute vs. Ab Global Risk | Payden Absolute vs. Pace High Yield |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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