Correlation Between Putnam Tax and Putnam International
Can any of the company-specific risk be diversified away by investing in both Putnam Tax and Putnam International 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 International 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 International Equity, you can compare the effects of market volatilities on Putnam Tax and Putnam International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Tax and Putnam International.
Diversification Opportunities for Putnam Tax and Putnam International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Putnam is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Putnam International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam International has no effect on the direction of Putnam Tax i.e., Putnam Tax and Putnam International go up and down completely randomly.
Pair Corralation between Putnam Tax and Putnam International
Assuming the 90 days horizon Putnam Tax is expected to generate 1.39 times less return on investment than Putnam International. But when comparing it to its historical volatility, Putnam Tax Exempt is 2.87 times less risky than Putnam International. It trades about 0.15 of its potential returns per unit of risk. Putnam International Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,195 in Putnam International Equity on August 29, 2024 and sell it today you would earn a total of 402.00 from holding Putnam International Equity or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Tax Exempt vs. Putnam International Equity
Performance |
| Timeline |
| Putnam Tax Exempt |
| Putnam International |
Putnam Tax and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Tax and Putnam International
The main advantage of trading using opposite Putnam Tax and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Tax position performs unexpectedly, Putnam International 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 International will offset losses from the drop in Putnam International'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 International vs. Vanguard Short Term Federal | Putnam International vs. Quantitative Longshort Equity | Putnam International vs. Rbc Ultra Short Fixed | Putnam International vs. Aqr Long Short Equity |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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