Correlation Between Gmo Global and Payden Absolute

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Can any of the company-specific risk be diversified away by investing in both Gmo Global 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 Gmo Global and Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Equity and Payden Absolute Return, you can compare the effects of market volatilities on Gmo Global 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 Gmo Global with a short position of Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Payden Absolute.

Diversification Opportunities for Gmo Global and Payden Absolute

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gmo and Payden is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity 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 Gmo Global 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 Gmo Global Equity 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 Gmo Global i.e., Gmo Global and Payden Absolute go up and down completely randomly.

Pair Corralation between Gmo Global and Payden Absolute

Assuming the 90 days horizon Gmo Global Equity is expected to under-perform the Payden Absolute. In addition to that, Gmo Global is 13.13 times more volatile than Payden Absolute Return. It trades about -0.14 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.12 per unit of volatility. If you would invest  943.00  in Payden Absolute Return on October 6, 2024 and sell it today you would earn a total of  4.00  from holding Payden Absolute Return or generate 0.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gmo Global Equity  vs.  Payden Absolute Return

 Performance 
       Timeline  
Gmo Global Equity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gmo Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
Payden Absolute Return 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.

Gmo Global and Payden Absolute Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gmo Global and Payden Absolute

The main advantage of trading using opposite Gmo Global and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global 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 Gmo Global Equity 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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