Correlation Between Payden Absolute and Northern International
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Northern 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 Northern 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 Northern International Equity, you can compare the effects of market volatilities on Payden Absolute and Northern 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 Northern International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Northern International.
Diversification Opportunities for Payden Absolute and Northern International
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payden and Northern is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Northern International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern International 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 Northern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern International has no effect on the direction of Payden Absolute i.e., Payden Absolute and Northern International go up and down completely randomly.
Pair Corralation between Payden Absolute and Northern International
Assuming the 90 days horizon Payden Absolute is expected to generate 13.41 times less return on investment than Northern International. But when comparing it to its historical volatility, Payden Absolute Return is 11.03 times less risky than Northern International. It trades about 0.16 of its potential returns per unit of risk. Northern International Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,026 in Northern International Equity on November 27, 2024 and sell it today you would earn a total of 29.00 from holding Northern International Equity or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Northern International Equity
Performance |
| Timeline |
| Payden Absolute Return |
| Northern International |
Payden Absolute and Northern International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Northern International
The main advantage of trading using opposite Payden Absolute and Northern International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Northern 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 Northern International will offset losses from the drop in Northern International's long position.| Payden Absolute vs. Investec Global Franchise | Payden Absolute vs. Ms Global Fixed | Payden Absolute vs. Us Global Investors | Payden Absolute vs. Barings Global Floating |
| Northern International vs. Ffcdax | Northern International vs. Fdzbpx | Northern International vs. Fabwx | Northern International vs. Fxybjx |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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