Correlation Between Payden Absolute and Mondrian International
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Mondrian International 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 Mondrian International 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 Mondrian International Value, you can compare the effects of market volatilities on Payden Absolute and Mondrian International 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 Mondrian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Mondrian International.
Diversification Opportunities for Payden Absolute and Mondrian International
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Mondrian is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Mondrian International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondrian International 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 Mondrian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondrian International has no effect on the direction of Payden Absolute i.e., Payden Absolute and Mondrian International go up and down completely randomly.
Pair Corralation between Payden Absolute and Mondrian International
Assuming the 90 days horizon Payden Absolute Return is expected to generate 0.24 times more return on investment than Mondrian International. However, Payden Absolute Return is 4.11 times less risky than Mondrian International. It trades about -0.1 of its potential returns per unit of risk. Mondrian International Value is currently generating about -0.06 per unit of risk. If you would invest 951.00 in Payden Absolute Return on September 5, 2024 and sell it today you would lose (4.00) from holding Payden Absolute Return or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Mondrian International Value
Performance |
| Timeline |
| Payden Absolute Return |
| Mondrian International |
Payden Absolute and Mondrian International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Mondrian International
The main advantage of trading using opposite Payden Absolute and Mondrian International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Mondrian International 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 Mondrian International will offset losses from the drop in Mondrian International's long position.| Payden Absolute vs. Payden Porate Bond | Payden Absolute vs. Payden Absolute Return | Payden Absolute vs. Payden Emerging Markets | Payden Absolute vs. Payden Core Bond |
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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