Correlation Between DWS Municipal and Putnam Municipal
Can any of the company-specific risk be diversified away by investing in both DWS Municipal and Putnam Municipal 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 DWS Municipal and Putnam Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and Putnam Municipal Opportunities, you can compare the effects of market volatilities on DWS Municipal and Putnam Municipal 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 DWS Municipal with a short position of Putnam Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Putnam Municipal.
Diversification Opportunities for DWS Municipal and Putnam Municipal
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DWS and Putnam is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp and DWS Municipal 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 DWS Municipal Income are associated (or correlated) with Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of DWS Municipal i.e., DWS Municipal and Putnam Municipal go up and down completely randomly.
Pair Corralation between DWS Municipal and Putnam Municipal
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 0.69 times more return on investment than Putnam Municipal. However, DWS Municipal Income is 1.46 times less risky than Putnam Municipal. It trades about 0.26 of its potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.11 per unit of risk. If you would invest 965.00 in DWS Municipal Income on August 29, 2024 and sell it today you would earn a total of 35.00 from holding DWS Municipal Income or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. Putnam Municipal Opportunities
Performance |
| Timeline |
| DWS Municipal Income |
| Putnam Municipal Opp |
DWS Municipal and Putnam Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and Putnam Municipal
The main advantage of trading using opposite DWS Municipal and Putnam Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal position performs unexpectedly, Putnam Municipal 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 Municipal will offset losses from the drop in Putnam Municipal's long position.| DWS Municipal vs. Invesco High Income | DWS Municipal vs. Blackrock Muniholdings Ny | DWS Municipal vs. Nuveen California Select | DWS Municipal vs. MFS Investment Grade |
| Putnam Municipal vs. Invesco Municipal Income | Putnam Municipal vs. DWS Municipal Income | Putnam Municipal vs. MFS Municipal Income | Putnam Municipal vs. MFS High Income |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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