Correlation Between Payden Absolute and Franklin California
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Franklin California 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 Franklin California 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 Franklin California High, you can compare the effects of market volatilities on Payden Absolute and Franklin California 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 Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Franklin California.
Diversification Opportunities for Payden Absolute and Franklin California
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Payden and Franklin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High 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 Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of Payden Absolute i.e., Payden Absolute and Franklin California go up and down completely randomly.
Pair Corralation between Payden Absolute and Franklin California
Assuming the 90 days horizon Payden Absolute is expected to generate 3.08 times less return on investment than Franklin California. But when comparing it to its historical volatility, Payden Absolute Return is 4.75 times less risky than Franklin California. It trades about 0.21 of its potential returns per unit of risk. Franklin California High is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 988.00 in Franklin California High on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Franklin California High or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Payden Absolute Return vs. Franklin California High
Performance |
| Timeline |
| Payden Absolute Return |
| Franklin California High |
Payden Absolute and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Franklin California
The main advantage of trading using opposite Payden Absolute and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Franklin California 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 Franklin California will offset losses from the drop in Franklin California's long position.| Payden Absolute vs. Transamerica Intermediate Muni | Payden Absolute vs. Morningstar Municipal Bond | Payden Absolute vs. Federated Government Ultrashort | Payden Absolute vs. Nuveen Minnesota Municipal |
| Franklin California vs. Gmo High Yield | Franklin California vs. Lord Abbett High | Franklin California vs. Victory High Yield | Franklin California vs. Artisan High Income |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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