Correlation Between Payden Emerging and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both Payden Emerging and Sit Emerging 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 Sit Emerging 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 Sit Emerging Markets, you can compare the effects of market volatilities on Payden Emerging and Sit Emerging 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 Sit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Emerging and Sit Emerging.
Diversification Opportunities for Payden Emerging and Sit Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Payden and Sit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Payden Emerging Markets and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets 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 Sit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of Payden Emerging i.e., Payden Emerging and Sit Emerging go up and down completely randomly.
Pair Corralation between Payden Emerging and Sit Emerging
Assuming the 90 days horizon Payden Emerging Markets is expected to generate 0.83 times more return on investment than Sit Emerging. However, Payden Emerging Markets is 1.2 times less risky than Sit Emerging. It trades about 0.2 of its potential returns per unit of risk. Sit Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 1,053 in Payden Emerging Markets on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Payden Emerging Markets or generate 1.42% 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. Sit Emerging Markets
Performance |
| Timeline |
| Payden Emerging Markets |
| Sit Emerging Markets |
Payden Emerging and Sit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Emerging and Sit Emerging
The main advantage of trading using opposite Payden Emerging and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Emerging position performs unexpectedly, Sit Emerging 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 Sit Emerging will offset losses from the drop in Sit Emerging's long position.| Payden Emerging vs. Calvert Moderate Allocation | Payden Emerging vs. Qs Moderate Growth | Payden Emerging vs. Blackrock Moderate Prepared | Payden Emerging vs. Jp Morgan Smartretirement |
| Sit Emerging vs. Janus Global Technology | Sit Emerging vs. Invesco Technology Fund | Sit Emerging vs. Mfs Technology Fund | Sit Emerging vs. Blackrock Science Technology |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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