Correlation Between Putnam Convertible and Great West
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Great West 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 Great West 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 Great West Lifetime 2020, you can compare the effects of market volatilities on Putnam Convertible and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Great West.
Diversification Opportunities for Putnam Convertible and Great West
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Great is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Great West Lifetime 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Great West go up and down completely randomly.
Pair Corralation between Putnam Convertible and Great West
Assuming the 90 days horizon Putnam Convertible Securities is expected to generate 1.53 times more return on investment than Great West. However, Putnam Convertible is 1.53 times more volatile than Great West Lifetime 2020. It trades about 0.06 of its potential returns per unit of risk. Great West Lifetime 2020 is currently generating about 0.07 per unit of risk. If you would invest 2,242 in Putnam Convertible Securities on December 12, 2024 and sell it today you would earn a total of 229.00 from holding Putnam Convertible Securities or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Securities vs. Great West Lifetime 2020
Performance |
| Timeline |
| Putnam Convertible |
| Great West Lifetime |
Putnam Convertible and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Great West
The main advantage of trading using opposite Putnam Convertible and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Putnam Convertible vs. Blackrock Global Longshort | ||
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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