Correlation Between Putnam High and Putnam California
Can any of the company-specific risk be diversified away by investing in both Putnam High and Putnam California 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 High and Putnam California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam High Yield and Putnam California Tax, you can compare the effects of market volatilities on Putnam High and Putnam California 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 High with a short position of Putnam California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Putnam California.
Diversification Opportunities for Putnam High and Putnam California
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Yield and Putnam California Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam California Tax and Putnam High 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 High Yield are associated (or correlated) with Putnam California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam California Tax has no effect on the direction of Putnam High i.e., Putnam High and Putnam California go up and down completely randomly.
Pair Corralation between Putnam High and Putnam California
Assuming the 90 days horizon Putnam High Yield is expected to generate 1.12 times more return on investment than Putnam California. However, Putnam High is 1.12 times more volatile than Putnam California Tax. It trades about 0.12 of its potential returns per unit of risk. Putnam California Tax is currently generating about 0.07 per unit of risk. If you would invest 462.00 in Putnam High Yield on August 31, 2024 and sell it today you would earn a total of 78.00 from holding Putnam High Yield or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam High Yield vs. Putnam California Tax
Performance |
| Timeline |
| Putnam High Yield |
| Putnam California Tax |
Putnam High and Putnam California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Putnam California
The main advantage of trading using opposite Putnam High and Putnam California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Putnam California 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 California will offset losses from the drop in Putnam California's long position.| Putnam High vs. Federated Institutional High | Putnam High vs. Valic Company I | Putnam High vs. Prudential Short Duration | Putnam High vs. Blackrock High Yield |
| Putnam California vs. Franklin Lifesmart Retirement | Putnam California vs. Dimensional Retirement Income | Putnam California vs. Saat Moderate Strategy | Putnam California vs. Calvert Moderate Allocation |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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