Correlation Between Western Asset and Putnam Managed
Can any of the company-specific risk be diversified away by investing in both Western Asset and Putnam Managed 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 Western Asset and Putnam Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Putnam Managed Municipal, you can compare the effects of market volatilities on Western Asset and Putnam Managed 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 Western Asset with a short position of Putnam Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Putnam Managed.
Diversification Opportunities for Western Asset and Putnam Managed
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Putnam is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Putnam Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Managed Municipal and Western Asset 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 Western Asset Investment are associated (or correlated) with Putnam Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Managed Municipal has no effect on the direction of Western Asset i.e., Western Asset and Putnam Managed go up and down completely randomly.
Pair Corralation between Western Asset and Putnam Managed
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the Putnam Managed. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 1.6 times less risky than Putnam Managed. The stock trades about -0.01 of its potential returns per unit of risk. The Putnam Managed Municipal is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 624.00 in Putnam Managed Municipal on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Putnam Managed Municipal or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Putnam Managed Municipal
Performance |
| Timeline |
| Western Asset Investment |
| Putnam Managed Municipal |
Western Asset and Putnam Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Putnam Managed
The main advantage of trading using opposite Western Asset and Putnam Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Putnam Managed 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 Managed will offset losses from the drop in Putnam Managed's long position.| Western Asset vs. HUMANA INC | Western Asset vs. SCOR PK | Western Asset vs. Aquagold International | Western Asset vs. Thrivent High Yield |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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