Correlation Between Federated Hermes and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Federated Hermes 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 Federated Hermes and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Conservative and Payden Absolute Return, you can compare the effects of market volatilities on Federated Hermes 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 Federated Hermes with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Payden Absolute.
Diversification Opportunities for Federated Hermes and Payden Absolute
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Payden is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative 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 Federated Hermes 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 Federated Hermes Conservative 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 Federated Hermes i.e., Federated Hermes and Payden Absolute go up and down completely randomly.
Pair Corralation between Federated Hermes and Payden Absolute
Assuming the 90 days horizon Federated Hermes is expected to generate 1.32 times less return on investment than Payden Absolute. In addition to that, Federated Hermes is 1.17 times more volatile than Payden Absolute Return. It trades about 0.22 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.34 per unit of volatility. If you would invest 940.00 in Payden Absolute Return on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Payden Absolute Return or generate 1.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Hermes Conservative vs. Payden Absolute Return
Performance |
Timeline |
Federated Hermes Con |
Payden Absolute Return |
Federated Hermes and Payden Absolute Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Hermes and Payden Absolute
The main advantage of trading using opposite Federated Hermes and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes 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.Federated Hermes vs. Federated Emerging Market | Federated Hermes vs. Federated Mdt All | Federated Hermes vs. Federated Mdt Balanced | Federated Hermes vs. Federated Hermes Emerging |
Payden Absolute vs. Enhanced Fixed Income | Payden Absolute vs. Locorr Dynamic Equity | Payden Absolute vs. Transamerica International Equity | Payden Absolute vs. Gmo Global Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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