Correlation Between Putnam Convertible and Franklin
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Franklin 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 Convertible and Franklin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Convertible Securities and Franklin Government Money, you can compare the effects of market volatilities on Putnam Convertible and Franklin 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 Convertible with a short position of Franklin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Franklin.
Diversification Opportunities for Putnam Convertible and Franklin
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Putnam and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and Putnam Convertible 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 Convertible Securities are associated (or correlated) with Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Franklin go up and down completely randomly.
Pair Corralation between Putnam Convertible and Franklin
If you would invest 2,612 in Putnam Convertible Securities on October 25, 2024 and sell it today you would earn a total of 44.00 from holding Putnam Convertible Securities or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Securities vs. Franklin Government Money
Performance |
| Timeline |
| Putnam Convertible |
| Franklin Government Money |
Putnam Convertible and Franklin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Franklin
The main advantage of trading using opposite Putnam Convertible and Franklin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Franklin 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 Franklin will offset losses from the drop in Franklin's long position.The idea behind Putnam Convertible Securities and Franklin Government Money pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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