Correlation Between Payden Floating and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Payden Floating and Ab Impact 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 Floating and Ab Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Floating Rate and Ab Impact Municipal, you can compare the effects of market volatilities on Payden Floating and Ab Impact 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 Floating with a short position of Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Floating and Ab Impact.
Diversification Opportunities for Payden Floating and Ab Impact
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Payden and ABIMX is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Payden Floating Rate and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal and Payden Floating 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 Floating Rate are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Payden Floating i.e., Payden Floating and Ab Impact go up and down completely randomly.
Pair Corralation between Payden Floating and Ab Impact
Assuming the 90 days horizon Payden Floating is expected to generate 6.87 times less return on investment than Ab Impact. But when comparing it to its historical volatility, Payden Floating Rate is 1.02 times less risky than Ab Impact. It trades about 0.07 of its potential returns per unit of risk. Ab Impact Municipal is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 985.00 in Ab Impact Municipal on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Ab Impact Municipal or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Floating Rate vs. Ab Impact Municipal
Performance |
| Timeline |
| Payden Floating Rate |
| Ab Impact Municipal |
Payden Floating and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Floating and Ab Impact
The main advantage of trading using opposite Payden Floating and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Floating position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact's long position.| Payden Floating vs. Qs Moderate Growth | Payden Floating vs. Smallcap Growth Fund | Payden Floating vs. Needham Aggressive Growth | Payden Floating vs. Qs Growth Fund |
| Ab Impact vs. SCOR PK | Ab Impact vs. Morningstar Unconstrained Allocation | Ab Impact vs. Thrivent High Yield | Ab Impact vs. Via Renewables |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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