Correlation Between Putnam Tax and Putnam Short-term
Can any of the company-specific risk be diversified away by investing in both Putnam Tax and Putnam Short-term 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 Short-term 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 Short Term Municipal, you can compare the effects of market volatilities on Putnam Tax and Putnam Short-term 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 Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Tax and Putnam Short-term.
Diversification Opportunities for Putnam Tax and Putnam Short-term
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Putnam Short Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Short Term 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 Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Short Term has no effect on the direction of Putnam Tax i.e., Putnam Tax and Putnam Short-term go up and down completely randomly.
Pair Corralation between Putnam Tax and Putnam Short-term
Assuming the 90 days horizon Putnam Tax Exempt is expected to generate 3.2 times more return on investment than Putnam Short-term. However, Putnam Tax is 3.2 times more volatile than Putnam Short Term Municipal. It trades about 0.14 of its potential returns per unit of risk. Putnam Short Term Municipal is currently generating about 0.17 per unit of risk. If you would invest 783.00 in Putnam Tax Exempt on August 29, 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 Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Putnam Tax Exempt vs. Putnam Short Term Municipal
Performance |
| Timeline |
| Putnam Tax Exempt |
| Putnam Short Term |
Putnam Tax and Putnam Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Tax and Putnam Short-term
The main advantage of trading using opposite Putnam Tax and Putnam Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Tax position performs unexpectedly, Putnam Short-term 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 Short-term will offset losses from the drop in Putnam Short-term'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 Short-term vs. Guidepath Managed Futures | Putnam Short-term vs. The Hartford Inflation | Putnam Short-term vs. T Rowe Price | Putnam Short-term vs. Lord Abbett Inflation |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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