Correlation Between Putnam Convertible and Jpmorgan Emerging
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Jpmorgan Emerging 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 Jpmorgan Emerging 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 Jpmorgan Emerging Markets, you can compare the effects of market volatilities on Putnam Convertible and Jpmorgan Emerging 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 Jpmorgan Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Jpmorgan Emerging.
Diversification Opportunities for Putnam Convertible and Jpmorgan Emerging
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Jpmorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Jpmorgan Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Emerging Markets 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 Jpmorgan Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Emerging Markets has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Jpmorgan Emerging go up and down completely randomly.
Pair Corralation between Putnam Convertible and Jpmorgan Emerging
Assuming the 90 days horizon Putnam Convertible Securities is expected to generate 2.04 times more return on investment than Jpmorgan Emerging. However, Putnam Convertible is 2.04 times more volatile than Jpmorgan Emerging Markets. It trades about 0.2 of its potential returns per unit of risk. Jpmorgan Emerging Markets is currently generating about 0.15 per unit of risk. If you would invest 2,572 in Putnam Convertible Securities on November 3, 2024 and sell it today you would earn a total of 68.00 from holding Putnam Convertible Securities or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Securities vs. Jpmorgan Emerging Markets
Performance |
| Timeline |
| Putnam Convertible |
| Jpmorgan Emerging Markets |
Putnam Convertible and Jpmorgan Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Jpmorgan Emerging
The main advantage of trading using opposite Putnam Convertible and Jpmorgan Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Jpmorgan Emerging 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 Jpmorgan Emerging will offset losses from the drop in Jpmorgan Emerging's long position.| Putnam Convertible vs. Fkhemx | Putnam Convertible vs. Fwnhtx | Putnam Convertible vs. Fznopx | Putnam Convertible vs. Wmcanx |
| Jpmorgan Emerging vs. Invesco Global Health | Jpmorgan Emerging vs. Blackrock Health Sciences | Jpmorgan Emerging vs. The Hartford Healthcare | Jpmorgan Emerging vs. Blackrock Health Sciences |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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