Correlation Between Franklin Convertible and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Convertible 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 Franklin Convertible and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Vertible Securities and Putnam Convertible Securities, you can compare the effects of market volatilities on Franklin Convertible 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 Franklin Convertible with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Convertible and Putnam Convertible.
Diversification Opportunities for Franklin Convertible and Putnam Convertible
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Putnam is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Vertible Securities and Putnam Convertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible and Franklin Convertible 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 Franklin Vertible Securities 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 has no effect on the direction of Franklin Convertible i.e., Franklin Convertible and Putnam Convertible go up and down completely randomly.
Pair Corralation between Franklin Convertible and Putnam Convertible
Assuming the 90 days horizon Franklin Convertible is expected to generate 1.77 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, Franklin Vertible Securities is 1.2 times less risky than Putnam Convertible. It trades about 0.1 of its potential returns per unit of risk. Putnam Convertible Securities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,612 in Putnam Convertible Securities on October 25, 2024 and sell it today you would earn a total of 44.00 from holding Putnam Convertible Securities or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Vertible Securities vs. Putnam Convertible Securities
Performance |
| Timeline |
| Franklin Convertible |
| Putnam Convertible |
Franklin Convertible and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Convertible and Putnam Convertible
The main advantage of trading using opposite Franklin Convertible and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Convertible 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.| Franklin Convertible vs. Franklin Equity Income | Franklin Convertible vs. Franklin Utilities Fund | Franklin Convertible vs. Franklin Strategic Income | Franklin Convertible vs. Franklin Rising Dividends |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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