Correlation Between Payden Absolute and Cullen High

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

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

Diversification Opportunities for Payden Absolute and Cullen High

0.69

Correlation Coefficient

Payden Absolute  Cullen High

Poor diversification

The 3 months correlation between Payden and Cullen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Cullen High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen High Dividend and Payden Absolute 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 Payden Absolute Return are associated (or correlated) with Cullen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen High Dividend has no effect on the direction of Payden Absolute i.e., Payden Absolute and Cullen High go up and down completely randomly.

Pair Corralation between Payden Absolute and Cullen High

Assuming the 90 days horizon Payden Absolute Return is expected to generate 0.11 times more return on investment than Cullen High. However, Payden Absolute Return is 9.15 times less risky than Cullen High. It trades about 0.26 of its potential returns per unit of risk. Cullen High Dividend is currently generating about 0.02 per unit of risk. If you would invest  946.00  in Payden Absolute Return on August 26, 2024 and sell it today you would earn a total of  7.00  from holding Payden Absolute Return or generate 0.74% return on investment over 90 days.

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

Payden Absolute Return  vs.  Cullen High Dividend

Payden Absolute Return

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Absolute Return are ranked lower than 24 (%) 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.

Cullen High Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cullen High Dividend are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Cullen High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Payden Absolute and Cullen High

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

The idea behind Payden Absolute Return and Cullen High Dividend 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.