Correlation Between Putnam Money and California Bond
Can any of the company-specific risk be diversified away by investing in both Putnam Money and California Bond 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 Money and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Money Market and California Bond Fund, you can compare the effects of market volatilities on Putnam Money and California Bond 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 Money with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Money and California Bond.
Diversification Opportunities for Putnam Money and California Bond
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Putnam and California is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Money Market and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and Putnam Money 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 Money Market are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Putnam Money i.e., Putnam Money and California Bond go up and down completely randomly.
Pair Corralation between Putnam Money and California Bond
Assuming the 90 days horizon Putnam Money Market is expected to generate 2.55 times more return on investment than California Bond. However, Putnam Money is 2.55 times more volatile than California Bond Fund. It trades about 0.03 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.05 per unit of risk. If you would invest 92.00 in Putnam Money Market on November 7, 2024 and sell it today you would earn a total of 8.00 from holding Putnam Money Market or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Putnam Money Market vs. California Bond Fund
Performance |
| Timeline |
| Putnam Money Market |
| California Bond |
Putnam Money and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Money and California Bond
The main advantage of trading using opposite Putnam Money and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Money position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Putnam Money vs. Hennessy Nerstone Mid | Putnam Money vs. Heartland Value Plus | Putnam Money vs. Ultrasmall Cap Profund Ultrasmall Cap | Putnam Money vs. Small Cap Value |
| California Bond vs. Ab Small Cap | California Bond vs. Lord Abbett Small | California Bond vs. Queens Road Small | California Bond vs. William Blair Small |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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