Correlation Between Metropolitan West and Putnam U
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Putnam U 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 Metropolitan West and Putnam U into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and Putnam U S, you can compare the effects of market volatilities on Metropolitan West and Putnam U 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 Metropolitan West with a short position of Putnam U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Putnam U.
Diversification Opportunities for Metropolitan West and Putnam U
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Metropolitan and Putnam is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Putnam U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S and Metropolitan West 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 Metropolitan West Total are associated (or correlated) with Putnam U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam U S has no effect on the direction of Metropolitan West i.e., Metropolitan West and Putnam U go up and down completely randomly.
Pair Corralation between Metropolitan West and Putnam U
Assuming the 90 days horizon Metropolitan West is expected to generate 1.49 times less return on investment than Putnam U. In addition to that, Metropolitan West is 1.03 times more volatile than Putnam U S. It trades about 0.03 of its total potential returns per unit of risk. Putnam U S is currently generating about 0.05 per unit of volatility. If you would invest 763.00 in Putnam U S on August 31, 2024 and sell it today you would earn a total of 67.00 from holding Putnam U S or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Metropolitan West Total vs. Putnam U S
Performance |
| Timeline |
| Metropolitan West Total |
| Putnam U S |
Metropolitan West and Putnam U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Putnam U
The main advantage of trading using opposite Metropolitan West and Putnam U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Putnam U 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 U will offset losses from the drop in Putnam U's long position.| Metropolitan West vs. Fidelity Managed Retirement | Metropolitan West vs. American Funds Retirement | Metropolitan West vs. Franklin Lifesmart Retirement | Metropolitan West vs. Jp Morgan Smartretirement |
| Putnam U vs. Metropolitan West Total | Putnam U vs. Metropolitan West Total | Putnam U vs. Pimco Total Return | Putnam U vs. Total Return Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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