Correlation Between Putnam Convertible and Salient Alternative
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Salient Alternative 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 Salient Alternative 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 Salient Alternative Beta, you can compare the effects of market volatilities on Putnam Convertible and Salient Alternative 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 Salient Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Salient Alternative.
Diversification Opportunities for Putnam Convertible and Salient Alternative
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Salient is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta 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 Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Salient Alternative go up and down completely randomly.
Pair Corralation between Putnam Convertible and Salient Alternative
Assuming the 90 days horizon Putnam Convertible Securities is expected to generate 0.85 times more return on investment than Salient Alternative. However, Putnam Convertible Securities is 1.18 times less risky than Salient Alternative. It trades about 0.11 of its potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.07 per unit of risk. If you would invest 2,298 in Putnam Convertible Securities on November 8, 2024 and sell it today you would earn a total of 354.00 from holding Putnam Convertible Securities or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Securities vs. Salient Alternative Beta
Performance |
| Timeline |
| Putnam Convertible |
| Salient Alternative Beta |
Putnam Convertible and Salient Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Salient Alternative
The main advantage of trading using opposite Putnam Convertible and Salient Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Salient Alternative 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 Alternative will offset losses from the drop in Salient Alternative's long position.| Putnam Convertible vs. Great West Moderately Aggressive | Putnam Convertible vs. Dimensional Retirement Income | Putnam Convertible vs. Sierra E Retirement | Putnam Convertible vs. Lifestyle Ii Moderate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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