Correlation Between Permanent Portfolio and Payden E

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

By analyzing existing cross correlation between Permanent Portfolio Class and Payden E Bond, you can compare the effects of market volatilities on Permanent Portfolio and Payden E 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 Permanent Portfolio with a short position of Payden E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permanent Portfolio and Payden E.

Diversification Opportunities for Permanent Portfolio and Payden E

0.36

Correlation Coefficient

Permanent Portfolio  Payden E

Weak diversification

The 3 months correlation between Permanent and Payden is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Permanent Portfolio Class and Payden E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden E Bond and Permanent Portfolio 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 Permanent Portfolio Class are associated (or correlated) with Payden E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden E Bond has no effect on the direction of Permanent Portfolio i.e., Permanent Portfolio and Payden E go up and down completely randomly.

Pair Corralation between Permanent Portfolio and Payden E

Assuming the 90 days horizon Permanent Portfolio Class is expected to generate 1.82 times more return on investment than Payden E. However, Permanent Portfolio is 1.82 times more volatile than Payden E Bond. It trades about 0.39 of its potential returns per unit of risk. Payden E Bond is currently generating about 0.06 per unit of risk. If you would invest  5,966  in Permanent Portfolio Class on October 20, 2024 and sell it today you would earn a total of  242.00  from holding Permanent Portfolio Class or generate 4.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Permanent Portfolio Class  vs.  Payden E Bond

Permanent Portfolio Class

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Permanent Portfolio Class are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Permanent Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden E Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payden E Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Payden E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Permanent Portfolio and Payden E

The main advantage of trading using opposite Permanent Portfolio and Payden E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permanent Portfolio position performs unexpectedly, Payden E 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 E will offset losses from the drop in Payden E's long position.

The idea behind Permanent Portfolio Class and Payden E Bond 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.