Correlation Between Cannae Holdings and Putnam Municipal
Can any of the company-specific risk be diversified away by investing in both Cannae Holdings and Putnam Municipal 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 Cannae Holdings and Putnam Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannae Holdings and Putnam Municipal Opportunities, you can compare the effects of market volatilities on Cannae Holdings and Putnam Municipal 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 Cannae Holdings with a short position of Putnam Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and Putnam Municipal.
Diversification Opportunities for Cannae Holdings and Putnam Municipal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cannae and Putnam is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp and Cannae Holdings 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 Cannae Holdings are associated (or correlated) with Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and Putnam Municipal go up and down completely randomly.
Pair Corralation between Cannae Holdings and Putnam Municipal
Given the investment horizon of 90 days Cannae Holdings is expected to generate 2.91 times more return on investment than Putnam Municipal. However, Cannae Holdings is 2.91 times more volatile than Putnam Municipal Opportunities. It trades about 0.1 of its potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.14 per unit of risk. If you would invest 1,784 in Cannae Holdings on September 1, 2024 and sell it today you would earn a total of 386.00 from holding Cannae Holdings or generate 21.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Cannae Holdings vs. Putnam Municipal Opportunities
Performance |
| Timeline |
| Cannae Holdings |
| Putnam Municipal Opp |
Cannae Holdings and Putnam Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannae Holdings and Putnam Municipal
The main advantage of trading using opposite Cannae Holdings and Putnam Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings position performs unexpectedly, Putnam Municipal 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 Municipal will offset losses from the drop in Putnam Municipal's long position.| Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. Hamilton Lane | Cannae Holdings vs. ConnectOne Bancorp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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