Correlation Between Payden Core and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Payden Core and Payden Absolute 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 Core and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Core Bond and Payden Absolute Return, you can compare the effects of market volatilities on Payden Core and Payden Absolute 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 Core with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Core and Payden Absolute.
Diversification Opportunities for Payden Core and Payden Absolute
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Payden and Payden is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Payden Core Bond and Payden Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Absolute Return and Payden Core 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 Core Bond are associated (or correlated) with Payden Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Absolute Return has no effect on the direction of Payden Core i.e., Payden Core and Payden Absolute go up and down completely randomly.
Pair Corralation between Payden Core and Payden Absolute
Assuming the 90 days horizon Payden Core is expected to generate 2.44 times less return on investment than Payden Absolute. In addition to that, Payden Core is 4.61 times more volatile than Payden Absolute Return. It trades about 0.04 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.41 per unit of volatility. If you would invest 892.00 in Payden Absolute Return on August 25, 2024 and sell it today you would earn a total of 63.00 from holding Payden Absolute Return or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Core Bond vs. Payden Absolute Return
Performance |
| Timeline |
| Payden Core Bond |
| Payden Absolute Return |
Payden Core and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Core and Payden Absolute
The main advantage of trading using opposite Payden Core and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Core position performs unexpectedly, Payden Absolute 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 Payden Absolute will offset losses from the drop in Payden Absolute's long position.| Payden Core vs. Payden Porate Bond | Payden Core vs. Payden Absolute Return | Payden Core vs. Payden Absolute Return | Payden Core vs. Payden Emerging Markets |
| Payden Absolute vs. Payden Porate Bond | Payden Absolute vs. Payden Absolute Return | Payden Absolute vs. Payden Emerging Markets | Payden Absolute vs. The Payden Regal |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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