Correlation Between Aggressive Balanced and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Aggressive Balanced and Payden Emerging 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 Aggressive Balanced and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Balanced Allocation and Payden Emerging Markets, you can compare the effects of market volatilities on Aggressive Balanced and Payden Emerging 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 Aggressive Balanced with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Balanced and Payden Emerging.
Diversification Opportunities for Aggressive Balanced and Payden Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aggressive and Payden is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Balanced Allocation and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets and Aggressive Balanced 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 Aggressive Balanced Allocation are associated (or correlated) with Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Aggressive Balanced i.e., Aggressive Balanced and Payden Emerging go up and down completely randomly.
Pair Corralation between Aggressive Balanced and Payden Emerging
Assuming the 90 days horizon Aggressive Balanced Allocation is expected to generate 2.42 times more return on investment than Payden Emerging. However, Aggressive Balanced is 2.42 times more volatile than Payden Emerging Markets. It trades about 0.21 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.41 per unit of risk. If you would invest 1,218 in Aggressive Balanced Allocation on June 11, 2025 and sell it today you would earn a total of 81.00 from holding Aggressive Balanced Allocation or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Aggressive Balanced Allocation vs. Payden Emerging Markets
Performance |
| Timeline |
| Aggressive Balanced |
| Payden Emerging Markets |
Aggressive Balanced and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Balanced and Payden Emerging
The main advantage of trading using opposite Aggressive Balanced and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Balanced position performs unexpectedly, Payden Emerging 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 Emerging will offset losses from the drop in Payden Emerging's long position.| Aggressive Balanced vs. Franklin Adjustable Government | Aggressive Balanced vs. Ab Bond Inflation | Aggressive Balanced vs. Old Westbury Municipal | Aggressive Balanced vs. Ambrus Core Bond |
| Payden Emerging vs. Payden Corporate Bond | Payden Emerging vs. Payden Floating Rate | Payden Emerging vs. Payden Absolute Return | Payden Emerging vs. Payden Porate Bond |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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