Correlation Between Putnam Global and Hennessy
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Hennessy 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 Global and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Financials and Hennessy Bp Midstream, you can compare the effects of market volatilities on Putnam Global and Hennessy 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 Global with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Hennessy.
Diversification Opportunities for Putnam Global and Hennessy
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Putnam and Hennessy is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Hennessy Bp Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Midstream and Putnam Global 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 Global Financials are associated (or correlated) with Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Midstream has no effect on the direction of Putnam Global i.e., Putnam Global and Hennessy go up and down completely randomly.
Pair Corralation between Putnam Global and Hennessy
Assuming the 90 days horizon Putnam Global is expected to generate 1.63 times less return on investment than Hennessy. But when comparing it to its historical volatility, Putnam Global Financials is 3.17 times less risky than Hennessy. It trades about 0.24 of its potential returns per unit of risk. Hennessy Bp Midstream is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,353 in Hennessy Bp Midstream on November 3, 2024 and sell it today you would earn a total of 51.00 from holding Hennessy Bp Midstream or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Financials vs. Hennessy Bp Midstream
Performance |
| Timeline |
| Putnam Global Financials |
| Hennessy Bp Midstream |
Putnam Global and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Hennessy
The main advantage of trading using opposite Putnam Global and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Hennessy 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 Hennessy will offset losses from the drop in Hennessy's long position.| Putnam Global vs. First Eagle Gold | Putnam Global vs. Precious Metals And | Putnam Global vs. Oppenheimer Gold Special | Putnam Global vs. Deutsche Gold Precious |
| Hennessy vs. Virtus Convertible | Hennessy vs. Lord Abbett Convertible | Hennessy vs. Advent Claymore Convertible | Hennessy vs. Putnam Convertible Securities |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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