Correlation Between Georgia Tax-free and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Georgia Tax-free 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 Georgia Tax-free and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Georgia Tax Free Bond and Payden Absolute Return, you can compare the effects of market volatilities on Georgia Tax-free 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 Georgia Tax-free with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Tax-free and Payden Absolute.
Diversification Opportunities for Georgia Tax-free and Payden Absolute
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Georgia and Payden is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free Bond 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 Georgia Tax-free 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 Georgia Tax Free Bond 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 Georgia Tax-free i.e., Georgia Tax-free and Payden Absolute go up and down completely randomly.
Pair Corralation between Georgia Tax-free and Payden Absolute
Assuming the 90 days horizon Georgia Tax-free is expected to generate 1.15 times less return on investment than Payden Absolute. In addition to that, Georgia Tax-free is 3.22 times more volatile than Payden Absolute Return. It trades about 0.09 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.32 per unit of volatility. If you would invest 892.00 in Payden Absolute Return on November 3, 2024 and sell it today you would earn a total of 56.00 from holding Payden Absolute Return or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Georgia Tax Free Bond vs. Payden Absolute Return
Performance |
| Timeline |
| Georgia Tax Free |
| Payden Absolute Return |
Georgia Tax-free and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Georgia Tax-free and Payden Absolute
The main advantage of trading using opposite Georgia Tax-free and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Georgia Tax-free 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.| Georgia Tax-free vs. Gabelli Convertible And | Georgia Tax-free vs. Columbia Convertible Securities | Georgia Tax-free vs. Putnam Convertible Securities | Georgia Tax-free vs. Fidelity Sai Convertible |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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