Correlation Between Bright Rock and Putnam High
Can any of the company-specific risk be diversified away by investing in both Bright Rock and Putnam High 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 Bright Rock and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Rock Mid and Putnam High Income, you can compare the effects of market volatilities on Bright Rock and Putnam High 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 Bright Rock with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Rock and Putnam High.
Diversification Opportunities for Bright Rock and Putnam High
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bright and Putnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bright Rock Mid and Putnam High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Income and Bright Rock 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 Bright Rock Mid are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Income has no effect on the direction of Bright Rock i.e., Bright Rock and Putnam High go up and down completely randomly.
Pair Corralation between Bright Rock and Putnam High
Assuming the 90 days horizon Bright Rock is expected to generate 1.06 times less return on investment than Putnam High. In addition to that, Bright Rock is 1.02 times more volatile than Putnam High Income. It trades about 0.05 of its total potential returns per unit of risk. Putnam High Income is currently generating about 0.06 per unit of volatility. If you would invest 543.00 in Putnam High Income on September 3, 2024 and sell it today you would earn a total of 138.00 from holding Putnam High Income or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Rock Mid vs. Putnam High Income
Performance |
| Timeline |
| Bright Rock Mid |
| Putnam High Income |
Bright Rock and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Rock and Putnam High
The main advantage of trading using opposite Bright Rock and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Rock position performs unexpectedly, Putnam High 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 High will offset losses from the drop in Putnam High's long position.| Bright Rock vs. Blackrock Sm Cap | Bright Rock vs. Principal Lifetime Hybrid | Bright Rock vs. Lord Abbett Diversified | Bright Rock vs. Wasatch Small Cap |
| Putnam High vs. RiverNorthDoubleLine Strategic Opportunity | Putnam High vs. Cornerstone Strategic Return | Putnam High vs. Oxford Lane Capital | Putnam High vs. Horizon Technology Finance |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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