Correlation Between Payden Emerging and Payden Strategic
Can any of the company-specific risk be diversified away by investing in both Payden Emerging and Payden Strategic 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 Emerging and Payden Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Emerging Markets and Payden Strategic Income, you can compare the effects of market volatilities on Payden Emerging and Payden Strategic 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 Emerging with a short position of Payden Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Emerging and Payden Strategic.
Diversification Opportunities for Payden Emerging and Payden Strategic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Payden and Payden is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Payden Emerging Markets and Payden Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Strategic Income and Payden Emerging 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 Emerging Markets are associated (or correlated) with Payden Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Strategic Income has no effect on the direction of Payden Emerging i.e., Payden Emerging and Payden Strategic go up and down completely randomly.
Pair Corralation between Payden Emerging and Payden Strategic
Assuming the 90 days horizon Payden Emerging Markets is expected to under-perform the Payden Strategic. In addition to that, Payden Emerging is 2.58 times more volatile than Payden Strategic Income. It trades about -0.09 of its total potential returns per unit of risk. Payden Strategic Income is currently generating about 0.12 per unit of volatility. If you would invest 961.00 in Payden Strategic Income on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Payden Strategic Income or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Payden Emerging Markets vs. Payden Strategic Income
Performance |
| Timeline |
| Payden Emerging Markets |
| Payden Strategic Income |
Payden Emerging and Payden Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Emerging and Payden Strategic
The main advantage of trading using opposite Payden Emerging and Payden Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Emerging position performs unexpectedly, Payden Strategic 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 Strategic will offset losses from the drop in Payden Strategic's long position.| Payden Emerging vs. Fidelity Managed Retirement | Payden Emerging vs. Target Retirement 2040 | Payden Emerging vs. Blackrock Moderate Prepared | Payden Emerging vs. Wisdomtree Siegel Moderate |
| Payden Strategic vs. Pace Large Value | Payden Strategic vs. Hartford Moderate Allocation | Payden Strategic vs. Qs Large Cap | Payden Strategic vs. Pace Large Growth |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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