Correlation Between Touchstone Ultra and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Touchstone Ultra 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 Touchstone Ultra and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Ultra Short and Payden Absolute Return, you can compare the effects of market volatilities on Touchstone Ultra 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 Touchstone Ultra with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Ultra and Payden Absolute.
Diversification Opportunities for Touchstone Ultra and Payden Absolute
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Payden is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Ultra Short 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 Touchstone Ultra 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 Touchstone Ultra Short 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 Touchstone Ultra i.e., Touchstone Ultra and Payden Absolute go up and down completely randomly.
Pair Corralation between Touchstone Ultra and Payden Absolute
Assuming the 90 days horizon Touchstone Ultra Short is expected to generate 0.27 times more return on investment than Payden Absolute. However, Touchstone Ultra Short is 3.75 times less risky than Payden Absolute. It trades about 0.1 of its potential returns per unit of risk. Payden Absolute Return is currently generating about -0.15 per unit of risk. If you would invest 924.00 in Touchstone Ultra Short on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Touchstone Ultra Short or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Ultra Short vs. Payden Absolute Return
Performance |
| Timeline |
| Touchstone Ultra Short |
| Payden Absolute Return |
Touchstone Ultra and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Ultra and Payden Absolute
The main advantage of trading using opposite Touchstone Ultra and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Ultra 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.| Touchstone Ultra vs. Touchstone Small Cap | Touchstone Ultra vs. Touchstone Sands Capital | Touchstone Ultra vs. Mid Cap Growth | Touchstone Ultra vs. Mid Cap Growth |
| Payden Absolute vs. Touchstone Ultra Short | Payden Absolute vs. Angel Oak Ultrashort | Payden Absolute vs. Quantitative Longshort Equity | Payden Absolute vs. Federated Short Term Income |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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