Correlation Between Putnam High and Gotham Defensive
Can any of the company-specific risk be diversified away by investing in both Putnam High and Gotham Defensive 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 Defensive 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 Defensive Long, you can compare the effects of market volatilities on Putnam High and Gotham Defensive 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 Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Gotham Defensive.
Diversification Opportunities for Putnam High and Gotham Defensive
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Gotham is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Gotham Defensive Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Defensive Long 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 Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Defensive Long has no effect on the direction of Putnam High i.e., Putnam High and Gotham Defensive go up and down completely randomly.
Pair Corralation between Putnam High and Gotham Defensive
Considering the 90-day investment horizon Putnam High Income is expected to generate 0.55 times more return on investment than Gotham Defensive. However, Putnam High Income is 1.83 times less risky than Gotham Defensive. It trades about 0.27 of its potential returns per unit of risk. Gotham Defensive Long is currently generating about 0.13 per unit of risk. If you would invest 659.00 in Putnam High Income on August 30, 2024 and sell it today you would earn a total of 19.00 from holding Putnam High Income or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam High Income vs. Gotham Defensive Long
Performance |
| Timeline |
| Putnam High Income |
| Gotham Defensive Long |
Putnam High and Gotham Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Gotham Defensive
The main advantage of trading using opposite Putnam High and Gotham Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Gotham Defensive 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 Defensive will offset losses from the drop in Gotham Defensive'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 |
| Gotham Defensive vs. Neuberger Berman Long | Gotham Defensive vs. Neuberger Berman Long | Gotham Defensive vs. Pimco Rae Worldwide |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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