Correlation Between Payden Absolute and Payden Regal
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Payden Regal 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 Regal 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 The Payden Regal, you can compare the effects of market volatilities on Payden Absolute and Payden Regal 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 Regal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Payden Regal.
Diversification Opportunities for Payden Absolute and Payden Regal
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Payden is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and The Payden Regal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Regal 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 Regal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Regal has no effect on the direction of Payden Absolute i.e., Payden Absolute and Payden Regal go up and down completely randomly.
Pair Corralation between Payden Absolute and Payden Regal
Assuming the 90 days horizon Payden Absolute is expected to generate 1.13 times less return on investment than Payden Regal. But when comparing it to its historical volatility, Payden Absolute Return is 2.55 times less risky than Payden Regal. It trades about 0.41 of its potential returns per unit of risk. The Payden Regal is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 589.00 in The Payden Regal on August 25, 2024 and sell it today you would earn a total of 47.00 from holding The Payden Regal or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. The Payden Regal
Performance |
| Timeline |
| Payden Absolute Return |
| Payden Regal |
Payden Absolute and Payden Regal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Payden Regal
The main advantage of trading using opposite Payden Absolute and Payden Regal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Payden Regal 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 Regal will offset losses from the drop in Payden Regal'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 Regal vs. Payden Porate Bond | Payden Regal vs. Payden Absolute Return | Payden Regal vs. Payden Absolute Return | Payden Regal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Commodity Directory Find actively traded commodities issued by global exchanges |