Correlation Between Payden Absolute and Payden Core
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Payden Core 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 Payden Core 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 Payden E Bond, you can compare the effects of market volatilities on Payden Absolute and Payden Core 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 Payden Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Payden Core.
Diversification Opportunities for Payden Absolute and Payden Core
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Payden is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Payden E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden E Bond 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 Payden Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden E Bond has no effect on the direction of Payden Absolute i.e., Payden Absolute and Payden Core go up and down completely randomly.
Pair Corralation between Payden Absolute and Payden Core
Assuming the 90 days horizon Payden Absolute Return is expected to generate 0.22 times more return on investment than Payden Core. However, Payden Absolute Return is 4.64 times less risky than Payden Core. It trades about 0.41 of its potential returns per unit of risk. Payden E Bond is currently generating about 0.04 per unit of risk. If you would invest 892.00 in Payden Absolute Return on August 25, 2024 and sell it today you would earn a total of 63.00 from holding Payden Absolute Return or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Payden E Bond
Performance |
| Timeline |
| Payden Absolute Return |
| Payden E Bond |
Payden Absolute and Payden Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Payden Core
The main advantage of trading using opposite Payden Absolute and Payden Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Payden Core 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 Core will offset losses from the drop in Payden Core's long position.| Payden Absolute vs. Payden Porate Bond | Payden Absolute vs. Payden Absolute Return | Payden Absolute vs. Payden Emerging Markets | Payden Absolute vs. The Payden Regal |
| Payden Core vs. Payden Porate Bond | Payden Core vs. Payden Absolute Return | Payden Core vs. Payden Absolute Return | Payden Core vs. Payden Emerging Markets |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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