Correlation Between Citigroup and Putnam Tax
Can any of the company-specific risk be diversified away by investing in both Citigroup and Putnam Tax 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 Citigroup and Putnam Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Putnam Tax Exempt, you can compare the effects of market volatilities on Citigroup and Putnam Tax 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 Citigroup with a short position of Putnam Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Putnam Tax.
Diversification Opportunities for Citigroup and Putnam Tax
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Putnam is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Putnam Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Tax Exempt and Citigroup 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 Citigroup are associated (or correlated) with Putnam Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Tax Exempt has no effect on the direction of Citigroup i.e., Citigroup and Putnam Tax go up and down completely randomly.
Pair Corralation between Citigroup and Putnam Tax
Taking into account the 90-day investment horizon Citigroup is expected to generate 7.12 times more return on investment than Putnam Tax. However, Citigroup is 7.12 times more volatile than Putnam Tax Exempt. It trades about 0.09 of its potential returns per unit of risk. Putnam Tax Exempt is currently generating about 0.08 per unit of risk. If you would invest 5,476 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,611 from holding Citigroup or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Putnam Tax Exempt
Performance |
| Timeline |
| Citigroup |
| Putnam Tax Exempt |
Citigroup and Putnam Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Putnam Tax
The main advantage of trading using opposite Citigroup and Putnam Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Putnam Tax 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 Tax will offset losses from the drop in Putnam Tax's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Putnam Tax vs. Putnam Equity Income | Putnam Tax vs. Putnam Floating Rate | Putnam Tax vs. Putnam High Yield | Putnam Tax vs. Putnam Floating Rate |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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