Correlation Between National Tax and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both National Tax and Putnam Convertible 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 National Tax and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on National Tax and Putnam Convertible 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 National Tax with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Putnam Convertible.
Diversification Opportunities for National Tax and Putnam Convertible
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Putnam is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and National Tax 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 The National Tax Free are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of National Tax i.e., National Tax and Putnam Convertible go up and down completely randomly.
Pair Corralation between National Tax and Putnam Convertible
Assuming the 90 days horizon National Tax is expected to generate 5.49 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, The National Tax Free is 3.36 times less risky than Putnam Convertible. It trades about 0.11 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,544 in Putnam Convertible Incm Gwth on September 15, 2024 and sell it today you would earn a total of 45.00 from holding Putnam Convertible Incm Gwth or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| National Tax |
| Putnam Convertible Incm |
National Tax and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Putnam Convertible
The main advantage of trading using opposite National Tax and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible's long position.| National Tax vs. The Missouri Tax Free | National Tax vs. The Bond Fund | National Tax vs. High Yield Municipal Fund | National Tax vs. Fidelity Intermediate Municipal |
| Putnam Convertible vs. The National Tax Free | Putnam Convertible vs. Artisan High Income | Putnam Convertible vs. Ft 9331 Corporate | Putnam Convertible vs. Western Asset 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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