Correlation Between Qs Defensive and Payden Absolute

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

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

Diversification Opportunities for Qs Defensive and Payden Absolute

-0.02

Correlation Coefficient

Qs Defensive  Payden Absolute

Good diversification

The 3 months correlation between LMLRX and Payden is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Qs Defensive Growth 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 Qs Defensive 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 Qs Defensive Growth 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 Qs Defensive i.e., Qs Defensive and Payden Absolute go up and down completely randomly.

Pair Corralation between Qs Defensive and Payden Absolute

Assuming the 90 days horizon Qs Defensive is expected to generate 1.56 times less return on investment than Payden Absolute. In addition to that, Qs Defensive is 5.6 times more volatile than Payden Absolute Return. It trades about 0.03 of its total potential returns per unit of risk. Payden Absolute Return is currently generating about 0.26 per unit of volatility. If you would invest  940.00  in Payden Absolute Return on December 28, 2024 and sell it today you would earn a total of  11.00  from holding Payden Absolute Return or generate 1.17% return on investment over 90 days.

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

Qs Defensive Growth  vs.  Payden Absolute Return

Qs Defensive Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Defensive Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Qs Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden Absolute Return

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Absolute Return are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Qs Defensive and Payden Absolute

The main advantage of trading using opposite Qs Defensive and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Defensive 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 Qs Defensive Growth 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..