Correlation Between Prudential Health and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Prudential Health and Putnam Floating 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 Prudential Health and Putnam Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Health Sciences and Putnam Floating Rate, you can compare the effects of market volatilities on Prudential Health and Putnam Floating 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 Prudential Health with a short position of Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Putnam Floating.
Diversification Opportunities for Prudential Health and Putnam Floating
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prudential and Putnam is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate and Prudential Health 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 Prudential Health Sciences are associated (or correlated) with Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Prudential Health i.e., Prudential Health and Putnam Floating go up and down completely randomly.
Pair Corralation between Prudential Health and Putnam Floating
Assuming the 90 days horizon Prudential Health Sciences is expected to generate 5.01 times more return on investment than Putnam Floating. However, Prudential Health is 5.01 times more volatile than Putnam Floating Rate. It trades about 0.04 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.21 per unit of risk. If you would invest 3,457 in Prudential Health Sciences on August 29, 2024 and sell it today you would earn a total of 678.00 from holding Prudential Health Sciences or generate 19.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Health Sciences vs. Putnam Floating Rate
Performance |
| Timeline |
| Prudential Health |
| Putnam Floating Rate |
Prudential Health and Putnam Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Health and Putnam Floating
The main advantage of trading using opposite Prudential Health and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health position performs unexpectedly, Putnam Floating 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 Floating will offset losses from the drop in Putnam Floating's long position.| Prudential Health vs. Fidelity Advisor Technology | Prudential Health vs. Fidelity Advisor Biotechnology | Prudential Health vs. Fidelity Advisor Financial | Prudential Health vs. Fidelity Advisor Utilities |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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