Correlation Between Aquagold International and Payden Absolute

Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Payden Absolute Return, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Payden Absolute.

Diversification Opportunities for Aquagold International and Payden Absolute

-0.37

Correlation Coefficient

Aquagold International  Payden Absolute

Very good diversification

The 3 months correlation between Aquagold and Payden is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International 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 Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Payden Absolute go up and down completely randomly.

Pair Corralation between Aquagold International and Payden Absolute

Given the investment horizon of 90 days Aquagold International is expected to generate 445.81 times more return on investment than Payden Absolute. However, Aquagold International is 445.81 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 0.2 per unit of risk. If you would invest  17.00  in Aquagold International on October 4, 2024 and sell it today you would lose (16.96) from holding Aquagold International or give up 99.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Payden Absolute Return

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Payden Absolute Return

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Absolute Return are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden Absolute is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Payden Absolute

The main advantage of trading using opposite Aquagold International and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International and Payden Absolute Return pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.