Correlation Between Scout Small and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Scout Small 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 Scout Small and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scout Small Cap and Payden Absolute Return, you can compare the effects of market volatilities on Scout Small 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 Scout Small with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Payden Absolute.
Diversification Opportunities for Scout Small and Payden Absolute
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scout and Payden is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap 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 Scout Small 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 Scout Small Cap 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 Scout Small i.e., Scout Small and Payden Absolute go up and down completely randomly.
Pair Corralation between Scout Small and Payden Absolute
Assuming the 90 days horizon Scout Small Cap is expected to generate 5.56 times more return on investment than Payden Absolute. However, Scout Small is 5.56 times more volatile than Payden Absolute Return. It trades about 0.05 of its potential returns per unit of risk. Payden Absolute Return is currently generating about -0.05 per unit of risk. If you would invest 3,444 in Scout Small Cap on September 13, 2024 and sell it today you would earn a total of 38.00 from holding Scout Small Cap or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scout Small Cap vs. Payden Absolute Return
Performance |
| Timeline |
| Scout Small Cap |
| Payden Absolute Return |
Scout Small and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scout Small and Payden Absolute
The main advantage of trading using opposite Scout Small and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small 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.| Scout Small vs. Carillon Chartwell Short | Scout Small vs. Chartwell Short Duration | Scout Small vs. Carillon Chartwell Short | Scout Small vs. Eagle Growth Income |
| Payden Absolute vs. Elfun Government Money | Payden Absolute vs. Dreyfus Government Cash | Payden Absolute vs. Payden Government Fund | Payden Absolute vs. Lord Abbett Government |
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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