Correlation Between Putnam High and Gotham Hedged
Can any of the company-specific risk be diversified away by investing in both Putnam High and Gotham Hedged 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 Gotham Hedged 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 Gotham Hedged E, you can compare the effects of market volatilities on Putnam High and Gotham Hedged 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 Gotham Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Gotham Hedged.
Diversification Opportunities for Putnam High and Gotham Hedged
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Gotham is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E 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 Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of Putnam High i.e., Putnam High and Gotham Hedged go up and down completely randomly.
Pair Corralation between Putnam High and Gotham Hedged
Considering the 90-day investment horizon Putnam High is expected to generate 1.12 times less return on investment than Gotham Hedged. In addition to that, Putnam High is 1.56 times more volatile than Gotham Hedged E. It trades about 0.08 of its total potential returns per unit of risk. Gotham Hedged E is currently generating about 0.13 per unit of volatility. If you would invest 1,049 in Gotham Hedged E on September 2, 2024 and sell it today you would earn a total of 335.00 from holding Gotham Hedged E or generate 31.94% 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. Gotham Hedged E
Performance |
| Timeline |
| Putnam High Income |
| Gotham Hedged E |
Putnam High and Gotham Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Gotham Hedged
The main advantage of trading using opposite Putnam High and Gotham Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Gotham Hedged 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 Gotham Hedged will offset losses from the drop in Gotham Hedged's long position.| Putnam High vs. Nuveen Global High | Putnam High vs. Blackstone Gso Strategic | Putnam High vs. Thornburg Income Builder | Putnam High vs. Western Asset Diversified |
| Gotham Hedged vs. Gotham Defensive Long | Gotham Hedged vs. Gotham Large Value | Gotham Hedged vs. Gotham Enhanced 500 | Gotham Hedged vs. Gotham Enhanced Return |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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