Correlation Between China Fund and Putnam High
Can any of the company-specific risk be diversified away by investing in both China Fund 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 China Fund and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Fund and Putnam High Income, you can compare the effects of market volatilities on China Fund 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 China Fund with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Fund and Putnam High.
Diversification Opportunities for China Fund and Putnam High
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Putnam is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Fund 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 China Fund 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 China Fund 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 China Fund i.e., China Fund and Putnam High go up and down completely randomly.
Pair Corralation between China Fund and Putnam High
Considering the 90-day investment horizon China Fund is expected to under-perform the Putnam High. In addition to that, China Fund is 4.68 times more volatile than Putnam High Income. It trades about -0.19 of its total potential returns per unit of risk. Putnam High Income is currently generating about 0.18 per unit of volatility. If you would invest 660.00 in Putnam High Income on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Putnam High Income or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Fund vs. Putnam High Income
Performance |
| Timeline |
| China Fund |
| Putnam High Income |
China Fund and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Fund and Putnam High
The main advantage of trading using opposite China Fund and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fund 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.| China Fund vs. Ashmore Group Plc | China Fund vs. Mexico Equity And | China Fund vs. Western Asset Managed | China Fund vs. Blackrock Muniholdings Quality |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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