Correlation Between Putnam Global and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Dreyfus Municipal 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 Dreyfus Municipal 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 Dreyfus Municipal Bond, you can compare the effects of market volatilities on Putnam Global and Dreyfus Municipal 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 Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Dreyfus Municipal.
Diversification Opportunities for Putnam Global and Dreyfus Municipal
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Dreyfus is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond 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 Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Putnam Global i.e., Putnam Global and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Putnam Global and Dreyfus Municipal
Assuming the 90 days horizon Putnam Global Financials is expected to under-perform the Dreyfus Municipal. In addition to that, Putnam Global is 1.08 times more volatile than Dreyfus Municipal Bond. It trades about -0.34 of its total potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about -0.26 per unit of volatility. If you would invest 1,239 in Dreyfus Municipal Bond on October 11, 2024 and sell it today you would lose (38.00) from holding Dreyfus Municipal Bond or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Financials vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Putnam Global Financials |
| Dreyfus Municipal Bond |
Putnam Global and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Dreyfus Municipal
The main advantage of trading using opposite Putnam Global and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Dreyfus Municipal 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 Dreyfus Municipal will offset losses from the drop in Dreyfus Municipal's long position.| Putnam Global vs. Neuberger Berman Real | Putnam Global vs. Nexpoint Real Estate | Putnam Global vs. Rems Real Estate | Putnam Global vs. Vy Clarion Real |
| Dreyfus Municipal vs. Fidelity Advisor Financial | Dreyfus Municipal vs. Financial Industries Fund | Dreyfus Municipal vs. Vanguard Financials Index | Dreyfus Municipal vs. Putnam Global Financials |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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