Correlation Between Gmo High and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Gmo High and Putnam Equity 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 Gmo High and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Putnam Equity Income, you can compare the effects of market volatilities on Gmo High and Putnam Equity 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 Gmo High with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Putnam Equity.
Diversification Opportunities for Gmo High and Putnam Equity
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Gmo High 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 Gmo High Yield are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Gmo High i.e., Gmo High and Putnam Equity go up and down completely randomly.
Pair Corralation between Gmo High and Putnam Equity
Assuming the 90 days horizon Gmo High is expected to generate 3.93 times less return on investment than Putnam Equity. But when comparing it to its historical volatility, Gmo High Yield is 3.62 times less risky than Putnam Equity. It trades about 0.26 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,660 in Putnam Equity Income on August 31, 2024 and sell it today you would earn a total of 163.00 from holding Putnam Equity Income or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gmo High Yield vs. Putnam Equity Income
Performance |
| Timeline |
| Gmo High Yield |
| Putnam Equity Income |
Gmo High and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Putnam Equity
The main advantage of trading using opposite Gmo High and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.| Gmo High vs. Vanguard High Yield Corporate | Gmo High vs. Vanguard High Yield Porate | Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield |
| Putnam Equity vs. Huber Capital Diversified | Putnam Equity vs. Aqr Diversified Arbitrage | Putnam Equity vs. Pgim Conservative Retirement | Putnam Equity vs. Pioneer Diversified High |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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