Correlation Between Ally Financial and Putnam Municipal
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Putnam Municipal 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 Ally Financial and Putnam Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Putnam Municipal Opportunities, you can compare the effects of market volatilities on Ally Financial and Putnam Municipal 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 Ally Financial with a short position of Putnam Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Putnam Municipal.
Diversification Opportunities for Ally Financial and Putnam Municipal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ally and Putnam is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp and Ally Financial 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 Ally Financial are associated (or correlated) with Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of Ally Financial i.e., Ally Financial and Putnam Municipal go up and down completely randomly.
Pair Corralation between Ally Financial and Putnam Municipal
Given the investment horizon of 90 days Ally Financial is expected to generate 2.48 times more return on investment than Putnam Municipal. However, Ally Financial is 2.48 times more volatile than Putnam Municipal Opportunities. It trades about 0.05 of its potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.02 per unit of risk. If you would invest 2,364 in Ally Financial on September 4, 2024 and sell it today you would earn a total of 1,556 from holding Ally Financial or generate 65.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Putnam Municipal Opportunities
Performance |
| Timeline |
| Ally Financial |
| Putnam Municipal Opp |
Ally Financial and Putnam Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Putnam Municipal
The main advantage of trading using opposite Ally Financial and Putnam Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Putnam Municipal 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 Putnam Municipal will offset losses from the drop in Putnam Municipal's long position.| Ally Financial vs. American Express | Ally Financial vs. Mastercard | Ally Financial vs. Visa Class A | Ally Financial vs. PayPal Holdings |
| Putnam Municipal vs. Invesco Municipal Income | Putnam Municipal vs. DWS Municipal Income | Putnam Municipal vs. MFS Municipal Income | Putnam Municipal vs. MFS High Income |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |