Correlation Between Putnam Equity and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Absolute 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 Absolute 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Putnam Equity and Absolute 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 Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Absolute Convertible.
Diversification Opportunities for Putnam Equity and Absolute Convertible
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Absolute is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Putnam Equity i.e., Putnam Equity and Absolute Convertible go up and down completely randomly.
Pair Corralation between Putnam Equity and Absolute Convertible
Assuming the 90 days horizon Putnam Equity Income is expected to generate 14.43 times more return on investment than Absolute Convertible. However, Putnam Equity is 14.43 times more volatile than Absolute Convertible Arbitrage. It trades about 0.3 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.5 per unit of risk. If you would invest 3,625 in Putnam Equity Income on September 5, 2024 and sell it today you would earn a total of 165.00 from holding Putnam Equity Income or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Equity Income vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Putnam Equity Income |
| Absolute Convertible |
Putnam Equity and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Absolute Convertible
The main advantage of trading using opposite Putnam Equity and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Absolute 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Putnam Equity vs. Absolute Convertible Arbitrage | Putnam Equity vs. Fidelity Sai Convertible | Putnam Equity vs. Virtus Convertible | Putnam Equity vs. Rationalpier 88 Convertible |
| Absolute Convertible vs. The Hartford Small | Absolute Convertible vs. Tax Managed Mid Small | Absolute Convertible vs. Ab Small Cap | Absolute Convertible vs. Ab Small Cap |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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