Correlation Between Ab Municipal and Putnam Short
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Putnam Short 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 Ab Municipal and Putnam Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Bond and Putnam Short Duration, you can compare the effects of market volatilities on Ab Municipal and Putnam Short 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 Ab Municipal with a short position of Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Putnam Short.
Diversification Opportunities for Ab Municipal and Putnam Short
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUNTX and Putnam is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Putnam Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Short Duration and Ab Municipal 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 Ab Municipal Bond are associated (or correlated) with Putnam Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Short Duration has no effect on the direction of Ab Municipal i.e., Ab Municipal and Putnam Short go up and down completely randomly.
Pair Corralation between Ab Municipal and Putnam Short
Assuming the 90 days horizon Ab Municipal is expected to generate 1.46 times less return on investment than Putnam Short. In addition to that, Ab Municipal is 1.79 times more volatile than Putnam Short Duration. It trades about 0.08 of its total potential returns per unit of risk. Putnam Short Duration is currently generating about 0.22 per unit of volatility. If you would invest 907.00 in Putnam Short Duration on August 24, 2024 and sell it today you would earn a total of 105.00 from holding Putnam Short Duration or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Putnam Short Duration
Performance |
| Timeline |
| Ab Municipal Bond |
| Putnam Short Duration |
Ab Municipal and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Putnam Short
The main advantage of trading using opposite Ab Municipal and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Putnam Short 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 Short will offset losses from the drop in Putnam Short's long position.| Ab Municipal vs. Wells Fargo Advantage | Ab Municipal vs. Nuveen High Yield | Ab Municipal vs. HUMANA INC | Ab Municipal vs. Aquagold International |
| Putnam Short vs. Ab Bond Inflation | Putnam Short vs. Ab Municipal Bond | Putnam Short vs. Aqr Managed Futures | Putnam Short vs. Lord Abbett Inflation |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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