Correlation Between California High-yield and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both California High-yield and Putnam Growth 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 California High-yield and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Putnam Growth Opportunities, you can compare the effects of market volatilities on California High-yield and Putnam Growth 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 California High-yield with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Putnam Growth.
Diversification Opportunities for California High-yield and Putnam Growth
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and Putnam is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport and California High-yield 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 California High Yield Municipal are associated (or correlated) with Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of California High-yield i.e., California High-yield and Putnam Growth go up and down completely randomly.
Pair Corralation between California High-yield and Putnam Growth
Assuming the 90 days horizon California High-yield is expected to generate 4.51 times less return on investment than Putnam Growth. But when comparing it to its historical volatility, California High Yield Municipal is 3.61 times less risky than Putnam Growth. It trades about 0.08 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,068 in Putnam Growth Opportunities on September 1, 2024 and sell it today you would earn a total of 1,742 from holding Putnam Growth Opportunities or generate 56.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Putnam Growth Opportunities
Performance |
| Timeline |
| California High Yield |
| Putnam Growth Opport |
California High-yield and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Putnam Growth
The main advantage of trading using opposite California High-yield and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Putnam Growth 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 Growth will offset losses from the drop in Putnam Growth's long position.| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
| Putnam Growth vs. T Rowe Price | Putnam Growth vs. Ishares Municipal Bond | Putnam Growth vs. Nuveen Minnesota Municipal | Putnam Growth vs. California High Yield Municipal |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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