Correlation Between Payden Emerging and Fidelity New

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

By analyzing existing cross correlation between Payden Emerging Markets and Fidelity New Markets, you can compare the effects of market volatilities on Payden Emerging and Fidelity New 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 Emerging with a short position of Fidelity New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Emerging and Fidelity New.

Diversification Opportunities for Payden Emerging and Fidelity New

0.81

Correlation Coefficient

Payden Emerging  Fidelity New

Very poor diversification

The 3 months correlation between Payden and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Payden Emerging Markets and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets and Payden Emerging 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 Emerging Markets are associated (or correlated) with Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Payden Emerging i.e., Payden Emerging and Fidelity New go up and down completely randomly.

Pair Corralation between Payden Emerging and Fidelity New

Assuming the 90 days horizon Payden Emerging Markets is expected to generate 0.88 times more return on investment than Fidelity New. However, Payden Emerging Markets is 1.14 times less risky than Fidelity New. It trades about 0.15 of its potential returns per unit of risk. Fidelity New Markets is currently generating about 0.06 per unit of risk. If you would invest  1,043  in Payden Emerging Markets on September 13, 2024 and sell it today you would earn a total of  26.00  from holding Payden Emerging Markets or generate 2.49% return on investment over 90 days.

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

Payden Emerging Markets  vs.  Fidelity New Markets

Payden Emerging Markets

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Payden Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity New Markets

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity New Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity New 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 Emerging and Fidelity New

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

The idea behind Payden Emerging Markets and Fidelity New Markets 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.