Correlation Between Real Assets and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Real Assets and Putnam Convertible 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 Real Assets and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Assets Portfolio and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Real Assets and Putnam Convertible 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 Real Assets with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Assets and Putnam Convertible.
Diversification Opportunities for Real Assets and Putnam Convertible
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Real and Putnam is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Real Assets i.e., Real Assets and Putnam Convertible go up and down completely randomly.
Pair Corralation between Real Assets and Putnam Convertible
Assuming the 90 days horizon Real Assets is expected to generate 5.28 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, Real Assets Portfolio is 1.24 times less risky than Putnam Convertible. It trades about 0.04 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,148 in Putnam Convertible Incm Gwth on September 2, 2024 and sell it today you would earn a total of 477.00 from holding Putnam Convertible Incm Gwth or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Assets Portfolio vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| Real Assets Portfolio |
| Putnam Convertible Incm |
Real Assets and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Assets and Putnam Convertible
The main advantage of trading using opposite Real Assets and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Assets position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible's long position.| Real Assets vs. Emerging Markets Equity | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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