Correlation Between Putnam Tax and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Putnam Tax and Putnam Floating 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 Floating 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 Floating Rate, you can compare the effects of market volatilities on Putnam Tax and Putnam Floating 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 Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Tax and Putnam Floating.
Diversification Opportunities for Putnam Tax and Putnam Floating
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Putnam and Putnam is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate 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 Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Putnam Tax i.e., Putnam Tax and Putnam Floating go up and down completely randomly.
Pair Corralation between Putnam Tax and Putnam Floating
Assuming the 90 days horizon Putnam Tax Exempt is expected to generate 3.27 times more return on investment than Putnam Floating. However, Putnam Tax is 3.27 times more volatile than Putnam Floating Rate. It trades about 0.14 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.35 per unit of risk. If you would invest 780.00 in Putnam Tax Exempt on August 25, 2024 and sell it today you would earn a total of 9.00 from holding Putnam Tax Exempt or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Tax Exempt vs. Putnam Floating Rate
Performance |
| Timeline |
| Putnam Tax Exempt |
| Putnam Floating Rate |
Putnam Tax and Putnam Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Tax and Putnam Floating
The main advantage of trading using opposite Putnam Tax and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Tax position performs unexpectedly, Putnam Floating 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 Floating will offset losses from the drop in Putnam Floating's long position.| Putnam Tax vs. Putnam Equity Income | Putnam Tax vs. Putnam Floating Rate | Putnam Tax vs. Putnam High Yield | Putnam Tax vs. Putnam Floating Rate |
| Putnam Floating vs. Putnam Equity Income | Putnam Floating vs. Putnam Tax Exempt | Putnam Floating vs. Putnam Floating Rate | Putnam Floating vs. Putnam High Yield |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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