Correlation Between Payden Government and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Payden Government and Aberdeen 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 Government and Aberdeen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Aberdeen Emerging Markets, you can compare the effects of market volatilities on Payden Government and Aberdeen 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 Government with a short position of Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Aberdeen Emerging.
Diversification Opportunities for Payden Government and Aberdeen Emerging
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Payden and Aberdeen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets and Payden Government 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 Government Fund are associated (or correlated) with Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of Payden Government i.e., Payden Government and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Payden Government and Aberdeen Emerging
Assuming the 90 days horizon Payden Government is expected to generate 2.4 times less return on investment than Aberdeen Emerging. But when comparing it to its historical volatility, Payden Government Fund is 5.63 times less risky than Aberdeen Emerging. It trades about 0.09 of its potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,272 in Aberdeen Emerging Markets on September 14, 2024 and sell it today you would earn a total of 105.00 from holding Aberdeen Emerging Markets or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Payden Government Fund vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Payden Government |
| Aberdeen Emerging Markets |
Payden Government and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Aberdeen Emerging
The main advantage of trading using opposite Payden Government and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government position performs unexpectedly, Aberdeen 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 Aberdeen Emerging will offset losses from the drop in Aberdeen Emerging's long position.| Payden Government vs. Vy Clarion Real | Payden Government vs. Amg Managers Centersquare | Payden Government vs. Short Real Estate | Payden Government vs. Virtus Real Estate |
| Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Gbl Eq | Aberdeen Emerging vs. Aberdeen Gbl Eq |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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