Correlation Between Aqr Diversified and Payden Corporate
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and Payden Corporate 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 Aqr Diversified and Payden Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Diversified Arbitrage and Payden Corporate Bond, you can compare the effects of market volatilities on Aqr Diversified and Payden Corporate 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 Aqr Diversified with a short position of Payden Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and Payden Corporate.
Diversification Opportunities for Aqr Diversified and Payden Corporate
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aqr and Payden is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Payden Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Corporate Bond and Aqr Diversified 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 Aqr Diversified Arbitrage are associated (or correlated) with Payden Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Corporate Bond has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and Payden Corporate go up and down completely randomly.
Pair Corralation between Aqr Diversified and Payden Corporate
Assuming the 90 days horizon Aqr Diversified Arbitrage is expected to under-perform the Payden Corporate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr Diversified Arbitrage is 2.21 times less risky than Payden Corporate. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Payden Corporate Bond is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 981.00 in Payden Corporate Bond on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Payden Corporate Bond or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. Payden Corporate Bond
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| Payden Corporate Bond |
Aqr Diversified and Payden Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and Payden Corporate
The main advantage of trading using opposite Aqr Diversified and Payden Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, Payden Corporate 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 Corporate will offset losses from the drop in Payden Corporate's long position.| Aqr Diversified vs. Jhancock Diversified Macro | Aqr Diversified vs. Western Asset Diversified | Aqr Diversified vs. Harbor Diversified International | Aqr Diversified vs. Tax Managed Mid Small |
| Payden Corporate vs. T Rowe Price | Payden Corporate vs. Harbor Diversified International | Payden Corporate vs. Jhancock Diversified Macro | Payden Corporate vs. Aqr Diversified Arbitrage |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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