Correlation Between International Investors and Putnam Income
Can any of the company-specific risk be diversified away by investing in both International Investors and Putnam Income 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 International Investors and Putnam Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Putnam Income Fund, you can compare the effects of market volatilities on International Investors and Putnam Income 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 International Investors with a short position of Putnam Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Putnam Income.
Diversification Opportunities for International Investors and Putnam Income
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Putnam is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Putnam Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Income and International Investors 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 International Investors Gold are associated (or correlated) with Putnam Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Income has no effect on the direction of International Investors i.e., International Investors and Putnam Income go up and down completely randomly.
Pair Corralation between International Investors and Putnam Income
Assuming the 90 days horizon International Investors Gold is expected to under-perform the Putnam Income. In addition to that, International Investors is 5.33 times more volatile than Putnam Income Fund. It trades about -0.13 of its total potential returns per unit of risk. Putnam Income Fund is currently generating about 0.17 per unit of volatility. If you would invest 516.00 in Putnam Income Fund on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Putnam Income Fund or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Investors Gold vs. Putnam Income Fund
Performance |
| Timeline |
| International Investors |
| Putnam Income |
International Investors and Putnam Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and Putnam Income
The main advantage of trading using opposite International Investors and Putnam Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors position performs unexpectedly, Putnam Income 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 Income will offset losses from the drop in Putnam Income's long position.The idea behind International Investors Gold and Putnam Income Fund 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.
| Putnam Income vs. Putnam Equity Income | Putnam Income vs. Putnam Tax Exempt | Putnam Income vs. Putnam Floating Rate | Putnam Income vs. Putnam High Yield |
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 Stocks Directory module to find actively traded stocks across global markets.
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