Correlation Between Payden Absolute and Payden Equity
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Payden Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Payden Absolute and Payden Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Payden Equity.
Diversification Opportunities for Payden Absolute and Payden Equity
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Payden and Payden is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Payden Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Equity Income has no effect on the direction of Payden Absolute i.e., Payden Absolute and Payden Equity go up and down completely randomly.
Pair Corralation between Payden Absolute and Payden Equity
Assuming the 90 days horizon Payden Absolute Return is expected to generate 0.07 times more return on investment than Payden Equity. However, Payden Absolute Return is 13.76 times less risky than Payden Equity. It trades about 0.32 of its potential returns per unit of risk. Payden Equity Income is currently generating about 0.01 per unit of risk. If you would invest 891.00 in Payden Absolute Return on November 3, 2024 and sell it today you would earn a total of 58.00 from holding Payden Absolute Return or generate 6.51% 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 Equity Income
Performance |
| Timeline |
| Payden Absolute Return |
| Payden Equity Income |
Payden Absolute and Payden Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Payden Equity
The main advantage of trading using opposite Payden Absolute and Payden Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Payden Equity 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 Equity will offset losses from the drop in Payden Equity's long position.| Payden Absolute vs. Columbia Real Estate | Payden Absolute vs. Neuberger Berman Real | Payden Absolute vs. Nexpoint Real Estate | Payden Absolute vs. Rreef Property Trust |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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