Correlation Between Pace High and Putnam U
Can any of the company-specific risk be diversified away by investing in both Pace 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 Pace 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 Pace High Yield and Putnam U S, you can compare the effects of market volatilities on Pace 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 Pace High with a short position of Putnam U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Putnam U.
Diversification Opportunities for Pace High and Putnam U
Very good diversification
The 3 months correlation between Pace and Putnam is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pace 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 Pace 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 Pace 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 Pace High i.e., Pace High and Putnam U go up and down completely randomly.
Pair Corralation between Pace High and Putnam U
Assuming the 90 days horizon Pace High is expected to generate 1.96 times less return on investment than Putnam U. But when comparing it to its historical volatility, Pace High Yield is 3.25 times less risky than Putnam U. It trades about 0.47 of its potential returns per unit of risk. Putnam U S is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 818.00 in Putnam U S on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Putnam U S or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pace High Yield vs. Putnam U S
Performance |
| Timeline |
| Pace High Yield |
| Putnam U S |
Pace High and Putnam U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Putnam U
The main advantage of trading using opposite Pace High and Putnam U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace 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.| Pace High vs. Pace Smallmedium Value | Pace High vs. Pace International Equity | Pace High vs. Pace International Equity | Pace High vs. Ubs Allocation Fund |
| Putnam U vs. George Putnam Fund | Putnam U vs. Putnam Equity Income | Putnam U vs. Putnam International Equity | Putnam U vs. Putnam Dynamic Asset |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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