Correlation Between Payden Global and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Payden Global 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 Global 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 Global Fixed and Payden Absolute Return, you can compare the effects of market volatilities on Payden Global 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 Global with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Global and Payden Absolute.
Diversification Opportunities for Payden Global and Payden Absolute
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Payden and Payden is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Payden Global Fixed 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 Global 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 Global Fixed 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 Global i.e., Payden Global and Payden Absolute go up and down completely randomly.
Pair Corralation between Payden Global and Payden Absolute
Assuming the 90 days horizon Payden Global is expected to generate 1.28 times less return on investment than Payden Absolute. In addition to that, Payden Global is 2.31 times more volatile than Payden Absolute Return. It trades about 0.06 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.19 per unit of volatility. If you would invest 841.00 in Payden Absolute Return on August 29, 2024 and sell it today you would earn a total of 104.00 from holding Payden Absolute Return or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Global Fixed vs. Payden Absolute Return
Performance |
| Timeline |
| Payden Global Fixed |
| Payden Absolute Return |
Payden Global and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Global and Payden Absolute
The main advantage of trading using opposite Payden Global and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Global 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 Global vs. Vanguard Total International | Payden Global vs. Dfa Five Year Global | Payden Global vs. HUMANA INC | Payden Global vs. Aquagold International |
| Payden Absolute vs. Transamerica Intermediate Muni | Payden Absolute vs. Morningstar Municipal Bond | Payden Absolute vs. Federated Government Ultrashort | Payden Absolute vs. Nuveen Minnesota Municipal |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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