Correlation Between MFS Government and Putnam Master
Can any of the company-specific risk be diversified away by investing in both MFS Government and Putnam Master 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 MFS Government and Putnam Master into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Government Markets and Putnam Master Intermediate, you can compare the effects of market volatilities on MFS Government and Putnam Master 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 MFS Government with a short position of Putnam Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Government and Putnam Master.
Diversification Opportunities for MFS Government and Putnam Master
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and Putnam is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MFS Government Markets and Putnam Master Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Master Interm and MFS Government 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 MFS Government Markets are associated (or correlated) with Putnam Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Master Interm has no effect on the direction of MFS Government i.e., MFS Government and Putnam Master go up and down completely randomly.
Pair Corralation between MFS Government and Putnam Master
Considering the 90-day investment horizon MFS Government is expected to generate 1.68 times less return on investment than Putnam Master. In addition to that, MFS Government is 1.07 times more volatile than Putnam Master Intermediate. It trades about 0.03 of its total potential returns per unit of risk. Putnam Master Intermediate is currently generating about 0.06 per unit of volatility. If you would invest 285.00 in Putnam Master Intermediate on August 31, 2024 and sell it today you would earn a total of 43.00 from holding Putnam Master Intermediate or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Government Markets vs. Putnam Master Intermediate
Performance |
| Timeline |
| MFS Government Markets |
| Putnam Master Interm |
MFS Government and Putnam Master Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Government and Putnam Master
The main advantage of trading using opposite MFS Government and Putnam Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Government position performs unexpectedly, Putnam Master 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 Master will offset losses from the drop in Putnam Master's long position.| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government vs. Nuveen California Select |
| Putnam Master vs. Blackrock Floating Rate | Putnam Master vs. Eaton Vance Senior | Putnam Master vs. Eaton Vance Senior | Putnam Master vs. Blackrock Debt Strategies |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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