Correlation Between Putnam High and Salient Select
Can any of the company-specific risk be diversified away by investing in both Putnam High and Salient Select 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 Salient Select 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 Salient Select Income, you can compare the effects of market volatilities on Putnam High and Salient Select 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 Salient Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Salient Select.
Diversification Opportunities for Putnam High and Salient Select
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Salient is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income 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 Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Putnam High i.e., Putnam High and Salient Select go up and down completely randomly.
Pair Corralation between Putnam High and Salient Select
Considering the 90-day investment horizon Putnam High is expected to generate 1.08 times less return on investment than Salient Select. In addition to that, Putnam High is 1.57 times more volatile than Salient Select Income. It trades about 0.05 of its total potential returns per unit of risk. Salient Select Income is currently generating about 0.08 per unit of volatility. If you would invest 1,549 in Salient Select Income on August 30, 2024 and sell it today you would earn a total of 406.00 from holding Salient Select Income or generate 26.21% 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. Salient Select Income
Performance |
| Timeline |
| Putnam High Income |
| Salient Select Income |
Putnam High and Salient Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Salient Select
The main advantage of trading using opposite Putnam High and Salient Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Salient Select 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 Salient Select will offset losses from the drop in Salient Select's long position.| Putnam High vs. Gabelli Global Small | Putnam High vs. MFS Investment Grade | Putnam High vs. Eaton Vance National | Putnam High vs. GAMCO Natural Resources |
| Salient Select vs. Cohen Steers Prfrd | Salient Select vs. Cohen Steers Preferd | Salient Select vs. Cohen Steers Prefrd | Salient Select vs. Cohen Steers Preferred |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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