Correlation Between Payden Absolute and American Beacon
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and American Beacon 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 American Beacon 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 American Beacon International, you can compare the effects of market volatilities on Payden Absolute and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and American Beacon.
Diversification Opportunities for Payden Absolute and American Beacon
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and American is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and American Beacon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Inte 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Inte has no effect on the direction of Payden Absolute i.e., Payden Absolute and American Beacon go up and down completely randomly.
Pair Corralation between Payden Absolute and American Beacon
Assuming the 90 days horizon Payden Absolute Return is expected to generate 0.24 times more return on investment than American Beacon. However, Payden Absolute Return is 4.24 times less risky than American Beacon. It trades about -0.13 of its potential returns per unit of risk. American Beacon International is currently generating about -0.06 per unit of risk. If you would invest 950.00 in Payden Absolute Return on September 1, 2024 and sell it today you would lose (5.00) from holding Payden Absolute Return or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Payden Absolute Return vs. American Beacon International
Performance |
| Timeline |
| Payden Absolute Return |
| American Beacon Inte |
Payden Absolute and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and American Beacon
The main advantage of trading using opposite Payden Absolute and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Payden Absolute vs. Jhancock Disciplined Value | Payden Absolute vs. Americafirst Large Cap | Payden Absolute vs. Aqr Large Cap | Payden Absolute vs. Dunham Large Cap |
| American Beacon vs. American Beacon Large | American Beacon vs. Large Pany Value | American Beacon vs. American Beacon Balanced | American Beacon vs. American Beacon Small |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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