Correlation Between Putnam Equity and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Putnam Convertible 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 Equity and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Equity Income and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Putnam Equity and Putnam Convertible 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 Equity with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Putnam Convertible.
Diversification Opportunities for Putnam Equity and Putnam Convertible
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and Putnam Equity 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 Equity Income are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Putnam Equity i.e., Putnam Equity and Putnam Convertible go up and down completely randomly.
Pair Corralation between Putnam Equity and Putnam Convertible
Assuming the 90 days horizon Putnam Equity Income is expected to generate 0.98 times more return on investment than Putnam Convertible. However, Putnam Equity Income is 1.02 times less risky than Putnam Convertible. It trades about -0.06 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about -0.23 per unit of risk. If you would invest 3,622 in Putnam Equity Income on November 28, 2024 and sell it today you would lose (28.00) from holding Putnam Equity Income or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Equity Income vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| Putnam Equity Income |
| Putnam Convertible Incm |
Putnam Equity and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Putnam Convertible
The main advantage of trading using opposite Putnam Equity and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Putnam Convertible 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 Putnam Convertible will offset losses from the drop in Putnam Convertible's long position.| Putnam Equity vs. Precious Metals And | Putnam Equity vs. Europac Gold Fund | Putnam Equity vs. The Gold Bullion | Putnam Equity vs. Gamco Global Gold |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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