Correlation Between Mid Cap and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Payden 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 Mid Cap and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Payden Emerging Markets, you can compare the effects of market volatilities on Mid Cap and Payden 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 Mid Cap with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Payden Emerging.
Diversification Opportunities for Mid Cap and Payden Emerging
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mid and Payden is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Mid Cap i.e., Mid Cap and Payden Emerging go up and down completely randomly.
Pair Corralation between Mid Cap and Payden Emerging
Assuming the 90 days horizon Mid Cap Growth is expected to generate 2.52 times more return on investment than Payden Emerging. However, Mid Cap is 2.52 times more volatile than Payden Emerging Markets. It trades about 0.38 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about -0.09 per unit of risk. If you would invest 3,998 in Mid Cap Growth on August 29, 2024 and sell it today you would earn a total of 455.00 from holding Mid Cap Growth or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Payden Emerging Markets
Performance |
| Timeline |
| Mid Cap Growth |
| Payden Emerging Markets |
Mid Cap and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Payden Emerging
The main advantage of trading using opposite Mid Cap and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Payden 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 Payden Emerging will offset losses from the drop in Payden Emerging's long position.| Mid Cap vs. Wasatch Small Cap | Mid Cap vs. Victory Trivalent International | Mid Cap vs. John Hancock Disciplined | Mid Cap vs. Mfs Mid Cap |
| Payden Emerging vs. Fidelity Managed Retirement | Payden Emerging vs. Target Retirement 2040 | Payden Emerging vs. Blackrock Moderate Prepared | Payden Emerging vs. Wisdomtree Siegel Moderate |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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