Correlation Between Putnam Tax and Putnam High
Can any of the company-specific risk be diversified away by investing in both Putnam Tax and Putnam High 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 Tax and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Tax Exempt and Putnam High Yield, you can compare the effects of market volatilities on Putnam Tax and Putnam High 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 Tax with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Tax and Putnam High.
Diversification Opportunities for Putnam Tax and Putnam High
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Putnam and Putnam is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield and Putnam Tax 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 Tax Exempt are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Yield has no effect on the direction of Putnam Tax i.e., Putnam Tax and Putnam High go up and down completely randomly.
Pair Corralation between Putnam Tax and Putnam High
Assuming the 90 days horizon Putnam Tax is expected to generate 1.33 times less return on investment than Putnam High. In addition to that, Putnam Tax is 1.6 times more volatile than Putnam High Yield. It trades about 0.13 of its total potential returns per unit of risk. Putnam High Yield is currently generating about 0.27 per unit of volatility. If you would invest 511.00 in Putnam High Yield on August 29, 2024 and sell it today you would earn a total of 29.00 from holding Putnam High Yield or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Tax Exempt vs. Putnam High Yield
Performance |
| Timeline |
| Putnam Tax Exempt |
| Putnam High Yield |
Putnam Tax and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Tax and Putnam High
The main advantage of trading using opposite Putnam Tax and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Tax position performs unexpectedly, Putnam High 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 High will offset losses from the drop in Putnam High's long position.| Putnam Tax vs. Fundamental Large Cap | Putnam Tax vs. Americafirst Large Cap | Putnam Tax vs. Pace Large Value | Putnam Tax vs. Dana Large Cap |
| Putnam High vs. Health Care Fund | Putnam High vs. The Gabelli Healthcare | Putnam High vs. Fidelity Advisor Health | Putnam High vs. Baron Health Care |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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