Correlation Between Alphacentric Hedged and Putnam High
Can any of the company-specific risk be diversified away by investing in both Alphacentric Hedged 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 Alphacentric Hedged and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphacentric Hedged Market and Putnam High Yield, you can compare the effects of market volatilities on Alphacentric Hedged 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 Alphacentric Hedged with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Hedged and Putnam High.
Diversification Opportunities for Alphacentric Hedged and Putnam High
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alphacentric and Putnam is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market 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 Alphacentric Hedged 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 Alphacentric Hedged Market 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 Alphacentric Hedged i.e., Alphacentric Hedged and Putnam High go up and down completely randomly.
Pair Corralation between Alphacentric Hedged and Putnam High
Assuming the 90 days horizon Alphacentric Hedged Market is expected to generate 1.33 times more return on investment than Putnam High. However, Alphacentric Hedged is 1.33 times more volatile than Putnam High Yield. It trades about -0.16 of its potential returns per unit of risk. Putnam High Yield is currently generating about -0.25 per unit of risk. If you would invest 2,906 in Alphacentric Hedged Market on October 9, 2024 and sell it today you would lose (80.00) from holding Alphacentric Hedged Market or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphacentric Hedged Market vs. Putnam High Yield
Performance |
| Timeline |
| Alphacentric Hedged |
| Putnam High Yield |
Alphacentric Hedged and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphacentric Hedged and Putnam High
The main advantage of trading using opposite Alphacentric Hedged and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphacentric Hedged 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.The idea behind Alphacentric Hedged Market and Putnam High Yield 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.
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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