Correlation Between Payden Absolute and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Gmo Emerging 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 Gmo Emerging 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 Gmo Emerging Country, you can compare the effects of market volatilities on Payden Absolute and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Gmo Emerging.
Diversification Opportunities for Payden Absolute and Gmo Emerging
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Gmo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Gmo Emerging Country in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Country 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Country has no effect on the direction of Payden Absolute i.e., Payden Absolute and Gmo Emerging go up and down completely randomly.
Pair Corralation between Payden Absolute and Gmo Emerging
Assuming the 90 days horizon Payden Absolute is expected to generate 2.03 times less return on investment than Gmo Emerging. But when comparing it to its historical volatility, Payden Absolute Return is 5.16 times less risky than Gmo Emerging. It trades about 0.21 of its potential returns per unit of risk. Gmo Emerging Country is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,059 in Gmo Emerging Country on August 26, 2024 and sell it today you would earn a total of 13.00 from holding Gmo Emerging Country or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Gmo Emerging Country
Performance |
| Timeline |
| Payden Absolute Return |
| Gmo Emerging Country |
Payden Absolute and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Gmo Emerging
The main advantage of trading using opposite Payden Absolute and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Payden Absolute vs. Gmo Emerging Country | Payden Absolute vs. Artisan Emerging Markets | Payden Absolute vs. Chartwell Short Duration | Payden Absolute vs. Bbh Intermediate Municipal |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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