Correlation Between Putnam High and Pimco Corporate
Can any of the company-specific risk be diversified away by investing in both Putnam High and Pimco Corporate 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 Pimco Corporate 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 Pimco Corporate Income, you can compare the effects of market volatilities on Putnam High and Pimco Corporate 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 Pimco Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Pimco Corporate.
Diversification Opportunities for Putnam High and Pimco Corporate
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Pimco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Pimco Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Corporate 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 Pimco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Corporate Income has no effect on the direction of Putnam High i.e., Putnam High and Pimco Corporate go up and down completely randomly.
Pair Corralation between Putnam High and Pimco Corporate
Considering the 90-day investment horizon Putnam High is expected to generate 1.0 times less return on investment than Pimco Corporate. In addition to that, Putnam High is 1.04 times more volatile than Pimco Corporate Income. It trades about 0.08 of its total potential returns per unit of risk. Pimco Corporate Income is currently generating about 0.08 per unit of volatility. If you would invest 1,149 in Pimco Corporate Income on August 31, 2024 and sell it today you would earn a total of 324.00 from holding Pimco Corporate Income or generate 28.2% 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. Pimco Corporate Income
Performance |
| Timeline |
| Putnam High Income |
| Pimco Corporate Income |
Putnam High and Pimco Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Pimco Corporate
The main advantage of trading using opposite Putnam High and Pimco Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Pimco Corporate 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 Pimco Corporate will offset losses from the drop in Pimco Corporate'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 Global Correlations module to find global opportunities by holding instruments from different markets.
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