Correlation Between Putnam High and Putnam U
Can any of the company-specific risk be diversified away by investing in both Putnam High 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 High 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 High Yield and Putnam U S, you can compare the effects of market volatilities on Putnam High 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 High with a short position of Putnam U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Putnam U.
Diversification Opportunities for Putnam High and Putnam U
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 U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S 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 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 High i.e., Putnam High and Putnam U go up and down completely randomly.
Pair Corralation between Putnam High and Putnam U
Assuming the 90 days horizon Putnam High Yield is expected to generate 0.65 times more return on investment than Putnam U. However, Putnam High Yield is 1.53 times less risky than Putnam U. It trades about 0.12 of its potential returns per unit of risk. Putnam U S is currently generating about 0.04 per unit of risk. If you would invest 455.00 in Putnam High Yield on August 30, 2024 and sell it today you would earn a total of 85.00 from holding Putnam High Yield or generate 18.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Putnam High Yield vs. Putnam U S
Performance |
| Timeline |
| Putnam High Yield |
| Putnam U S |
Putnam High and Putnam U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Putnam U
The main advantage of trading using opposite Putnam High and Putnam U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High 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 High vs. Blrc Sgy Mnp | Putnam High vs. Calamos Dynamic Convertible | Putnam High vs. California Bond Fund | Putnam High vs. Ab Bond Inflation |
| Putnam U vs. Putnam Equity Income | Putnam U vs. Putnam Tax Exempt | Putnam U vs. Putnam Floating Rate | Putnam U vs. Putnam High Yield |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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