Correlation Between Payden Absolute and Cavanal Hill
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Cavanal Hill 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 Cavanal Hill 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 Cavanal Hill Hedged, you can compare the effects of market volatilities on Payden Absolute and Cavanal Hill 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 Cavanal Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Cavanal Hill.
Diversification Opportunities for Payden Absolute and Cavanal Hill
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Payden and Cavanal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Cavanal Hill Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hill Hedged 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 Cavanal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hill Hedged has no effect on the direction of Payden Absolute i.e., Payden Absolute and Cavanal Hill go up and down completely randomly.
Pair Corralation between Payden Absolute and Cavanal Hill
Assuming the 90 days horizon Payden Absolute is expected to generate 3.98 times less return on investment than Cavanal Hill. But when comparing it to its historical volatility, Payden Absolute Return is 8.59 times less risky than Cavanal Hill. It trades about 0.22 of its potential returns per unit of risk. Cavanal Hill Hedged is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,141 in Cavanal Hill Hedged on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Cavanal Hill Hedged or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Cavanal Hill Hedged
Performance |
| Timeline |
| Payden Absolute Return |
| Cavanal Hill Hedged |
Payden Absolute and Cavanal Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Cavanal Hill
The main advantage of trading using opposite Payden Absolute and Cavanal Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Cavanal Hill 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 Cavanal Hill will offset losses from the drop in Cavanal Hill's long position.| Payden Absolute vs. Wisdomtree Siegel Global | Payden Absolute vs. Vanguard Global Credit | Payden Absolute vs. Rbb Fund Trust | Payden Absolute vs. Mirova Global Green |
| Cavanal Hill vs. Bond Fund Investor | Cavanal Hill vs. Strategic Enhanced Yield | Cavanal Hill vs. Limited Duration Fund | Cavanal Hill vs. Cavanal Hill Ultra |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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