Correlation Between Payden High and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Payden High and Emerging Markets 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 High and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden High Income and Emerging Markets Portfolio, you can compare the effects of market volatilities on Payden High and Emerging Markets 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 High with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden High and Emerging Markets.
Diversification Opportunities for Payden High and Emerging Markets
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Payden and Emerging is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Payden High Income and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Payden High 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 High Income are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Payden High i.e., Payden High and Emerging Markets go up and down completely randomly.
Pair Corralation between Payden High and Emerging Markets
Assuming the 90 days horizon Payden High Income is expected to generate 0.13 times more return on investment than Emerging Markets. However, Payden High Income is 7.48 times less risky than Emerging Markets. It trades about -0.23 of its potential returns per unit of risk. Emerging Markets Portfolio is currently generating about -0.06 per unit of risk. If you would invest 637.00 in Payden High Income on December 17, 2024 and sell it today you would lose (5.00) from holding Payden High Income or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden High Income vs. Emerging Markets Portfolio
Performance |
| Timeline |
| Payden High Income |
| Emerging Markets Por |
Payden High and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden High and Emerging Markets
The main advantage of trading using opposite Payden High and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden High position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Payden High vs. Franklin Moderate Allocation | ||
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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