Correlation Between Putnam High and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both Putnam High and Fidelity Advisor 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 Fidelity Advisor 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 Fidelity Advisor Energy, you can compare the effects of market volatilities on Putnam High and Fidelity Advisor 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 Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Fidelity Advisor.
Diversification Opportunities for Putnam High and Fidelity Advisor
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Fidelity is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Fidelity Advisor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Energy 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Energy has no effect on the direction of Putnam High i.e., Putnam High and Fidelity Advisor go up and down completely randomly.
Pair Corralation between Putnam High and Fidelity Advisor
Considering the 90-day investment horizon Putnam High is expected to generate 2.76 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Putnam High Income is 2.35 times less risky than Fidelity Advisor. It trades about 0.25 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,760 in Fidelity Advisor Energy on September 1, 2024 and sell it today you would earn a total of 341.00 from holding Fidelity Advisor Energy or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam High Income vs. Fidelity Advisor Energy
Performance |
| Timeline |
| Putnam High Income |
| Fidelity Advisor Energy |
Putnam High and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Fidelity Advisor
The main advantage of trading using opposite Putnam High and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Fidelity Advisor 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 Fidelity Advisor will offset losses from the drop in Fidelity Advisor's 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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