Correlation Between Putnam Floating and Pimco Funds

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Can any of the company-specific risk be diversified away by investing in both Putnam Floating and Pimco Funds 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 Floating and Pimco Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Floating Rate and Pimco Funds , you can compare the effects of market volatilities on Putnam Floating and Pimco Funds 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 Floating with a short position of Pimco Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Floating and Pimco Funds.

Diversification Opportunities for Putnam Floating and Pimco Funds

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Putnam and PIMCO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Floating Rate and Pimco Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Funds and Putnam Floating 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 Floating Rate are associated (or correlated) with Pimco Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Funds has no effect on the direction of Putnam Floating i.e., Putnam Floating and Pimco Funds go up and down completely randomly.

Pair Corralation between Putnam Floating and Pimco Funds

Assuming the 90 days horizon Putnam Floating is expected to generate 1.12 times less return on investment than Pimco Funds. But when comparing it to its historical volatility, Putnam Floating Rate is 1.94 times less risky than Pimco Funds. It trades about 0.22 of its potential returns per unit of risk. Pimco Funds is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Pimco Funds on August 31, 2024 and sell it today you would earn a total of  9.00  from holding Pimco Funds or generate 9.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Putnam Floating Rate  vs.  Pimco Funds

 Performance 
       Timeline  
Putnam Floating Rate 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pimco Funds 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Floating and Pimco Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Putnam Floating and Pimco Funds

The main advantage of trading using opposite Putnam Floating and Pimco Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Floating position performs unexpectedly, Pimco Funds 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 Pimco Funds will offset losses from the drop in Pimco Funds' long position.
The idea behind Putnam Floating Rate and Pimco Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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