Correlation Between Putnam Tax and Putnam U
Can any of the company-specific risk be diversified away by investing in both Putnam Tax and Putnam U 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 U 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 U S, you can compare the effects of market volatilities on Putnam Tax and Putnam U 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 U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Tax and Putnam U.
Diversification Opportunities for Putnam Tax and Putnam U
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Putnam U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S 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 U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam U S has no effect on the direction of Putnam Tax i.e., Putnam Tax and Putnam U go up and down completely randomly.
Pair Corralation between Putnam Tax and Putnam U
Assuming the 90 days horizon Putnam Tax Exempt is expected to generate 0.66 times more return on investment than Putnam U. However, Putnam Tax Exempt is 1.52 times less risky than Putnam U. It trades about 0.13 of its potential returns per unit of risk. Putnam U S is currently generating about 0.06 per unit of risk. If you would invest 758.00 in Putnam Tax Exempt on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Putnam Tax Exempt or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Tax Exempt vs. Putnam U S
Performance |
| Timeline |
| Putnam Tax Exempt |
| Putnam U S |
Putnam Tax and Putnam U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Tax and Putnam U
The main advantage of trading using opposite Putnam Tax and Putnam U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Tax position performs unexpectedly, Putnam U 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 U will offset losses from the drop in Putnam U'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 U vs. George Putnam Fund | Putnam U vs. Putnam Equity Income | Putnam U vs. Putnam International Equity | Putnam U vs. Aquagold International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Global Correlations Find global opportunities by holding instruments from different markets |