Correlation Between Payden Emerging and Payden Core
Can any of the company-specific risk be diversified away by investing in both Payden Emerging and Payden Core 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 Core 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 Core Bond, you can compare the effects of market volatilities on Payden Emerging and Payden Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Emerging and Payden Core.
Diversification Opportunities for Payden Emerging and Payden Core
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Payden is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Payden Emerging Markets and Payden Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Core Bond 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Core Bond has no effect on the direction of Payden Emerging i.e., Payden Emerging and Payden Core go up and down completely randomly.
Pair Corralation between Payden Emerging and Payden Core
Assuming the 90 days horizon Payden Emerging Markets is expected to generate 0.85 times more return on investment than Payden Core. However, Payden Emerging Markets is 1.18 times less risky than Payden Core. It trades about 0.21 of its potential returns per unit of risk. Payden Core Bond is currently generating about 0.06 per unit of risk. If you would invest 1,042 in Payden Emerging Markets on November 3, 2024 and sell it today you would earn a total of 11.00 from holding Payden Emerging Markets or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Emerging Markets vs. Payden Core Bond
Performance |
| Timeline |
| Payden Emerging Markets |
| Payden Core Bond |
Payden Emerging and Payden Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Emerging and Payden Core
The main advantage of trading using opposite Payden Emerging and Payden Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Emerging position performs unexpectedly, Payden Core 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 Core will offset losses from the drop in Payden Core's long position.| Payden Emerging vs. Cref Inflation Linked Bond | Payden Emerging vs. Aqr Managed Futures | Payden Emerging vs. Simt Multi Asset Inflation | Payden Emerging vs. Fidelity Sai Inflationfocused |
| Payden Core vs. Angel Oak Multi Strategy | Payden Core vs. Balanced Strategy Fund | Payden Core vs. Artisan Developing World | Payden Core vs. Federated Emerging Market |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |