Correlation Between Putnam High and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Putnam High and Federated Hermes 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 Putnam High and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam High Income and Federated Hermes Conservative, you can compare the effects of market volatilities on Putnam High and Federated Hermes 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 Putnam High with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Federated Hermes.
Diversification Opportunities for Putnam High and Federated Hermes
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Federated is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con and Putnam High 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 Putnam High Income are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Putnam High i.e., Putnam High and Federated Hermes go up and down completely randomly.
Pair Corralation between Putnam High and Federated Hermes
Considering the 90-day investment horizon Putnam High Income is expected to generate 9.08 times more return on investment than Federated Hermes. However, Putnam High is 9.08 times more volatile than Federated Hermes Conservative. It trades about 0.06 of its potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.22 per unit of risk. If you would invest 543.00 in Putnam High Income on September 3, 2024 and sell it today you would earn a total of 138.00 from holding Putnam High Income or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam High Income vs. Federated Hermes Conservative
Performance |
| Timeline |
| Putnam High Income |
| Federated Hermes Con |
Putnam High and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Federated Hermes
The main advantage of trading using opposite Putnam High and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Putnam High vs. RiverNorthDoubleLine Strategic Opportunity | Putnam High vs. Cornerstone Strategic Return | Putnam High vs. Oxford Lane Capital | Putnam High vs. Horizon Technology Finance |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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