Correlation Between Financials Ultrasector and Putnam High
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector 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 Financials Ultrasector and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and Putnam High Yield, you can compare the effects of market volatilities on Financials Ultrasector 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 Financials Ultrasector with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Putnam High.
Diversification Opportunities for Financials Ultrasector and Putnam High
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financials and Putnam is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield and Financials Ultrasector 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 Financials Ultrasector Profund 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 Yield has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Putnam High go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Putnam High
Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 14.08 times more return on investment than Putnam High. However, Financials Ultrasector is 14.08 times more volatile than Putnam High Yield. It trades about 0.22 of its potential returns per unit of risk. Putnam High Yield is currently generating about 0.11 per unit of risk. If you would invest 4,107 in Financials Ultrasector Profund on August 28, 2024 and sell it today you would earn a total of 451.00 from holding Financials Ultrasector Profund or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Putnam High Yield
Performance |
| Timeline |
| Financials Ultrasector |
| Putnam High Yield |
Financials Ultrasector and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Putnam High
The main advantage of trading using opposite Financials Ultrasector and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector 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.| Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Ultrashort Mid Cap Profund | Financials Ultrasector vs. Ultrashort Mid Cap Profund |
| Putnam High vs. Putnam Equity Income | Putnam High vs. Putnam Tax Exempt | Putnam High vs. Putnam Floating Rate | Putnam High vs. Putnam Floating Rate |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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