Correlation Between Intermediate Government and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Intermediate Government 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 Intermediate Government and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Intermediate Government 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 Intermediate Government with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Putnam Convertible.
Diversification Opportunities for Intermediate Government and Putnam Convertible
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate and Putnam is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond 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 Intermediate Government 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 Intermediate Government Bond 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 Intermediate Government i.e., Intermediate Government and Putnam Convertible go up and down completely randomly.
Pair Corralation between Intermediate Government and Putnam Convertible
Assuming the 90 days horizon Intermediate Government is expected to generate 3.65 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, Intermediate Government Bond is 6.04 times less risky than Putnam Convertible. It trades about 0.15 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,243 in Putnam Convertible Incm Gwth on October 17, 2024 and sell it today you would earn a total of 263.00 from holding Putnam Convertible Incm Gwth or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Government Bond vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| Intermediate Government |
| Putnam Convertible Incm |
Intermediate Government and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and Putnam Convertible
The main advantage of trading using opposite Intermediate Government and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government 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.The idea behind Intermediate Government Bond and Putnam Convertible Incm Gwth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Putnam Convertible vs. Mfs Technology Fund | Putnam Convertible vs. Firsthand Technology Opportunities | Putnam Convertible vs. Goldman Sachs Technology | Putnam Convertible vs. Blackrock Science Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |