Correlation Between Payden Absolute and Barings Global
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Barings Global 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 Barings Global 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 Barings Global Floating, you can compare the effects of market volatilities on Payden Absolute and Barings Global 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 Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Barings Global.
Diversification Opportunities for Payden Absolute and Barings Global
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Payden and Barings is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Barings Global Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Floating 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 Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Floating has no effect on the direction of Payden Absolute i.e., Payden Absolute and Barings Global go up and down completely randomly.
Pair Corralation between Payden Absolute and Barings Global
Assuming the 90 days horizon Payden Absolute is expected to generate 1.46 times less return on investment than Barings Global. But when comparing it to its historical volatility, Payden Absolute Return is 1.47 times less risky than Barings Global. It trades about 0.22 of its potential returns per unit of risk. Barings Global Floating is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 725.00 in Barings Global Floating on August 27, 2024 and sell it today you would earn a total of 148.00 from holding Barings Global Floating or generate 20.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Barings Global Floating
Performance |
| Timeline |
| Payden Absolute Return |
| Barings Global Floating |
Payden Absolute and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Barings Global
The main advantage of trading using opposite Payden Absolute and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Barings Global 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 Barings Global will offset losses from the drop in Barings Global'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 |
| Barings Global vs. Barings Active Short | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Active Short |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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