Correlation Between Putnam Income and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Putnam Income and Putnam Equity 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 Income and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Income Fund and Putnam Equity Income, you can compare the effects of market volatilities on Putnam Income and Putnam Equity 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 Income with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Income and Putnam Equity.
Diversification Opportunities for Putnam Income and Putnam Equity
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and Putnam is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Income Fund and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Putnam Income 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 Income Fund are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Putnam Income i.e., Putnam Income and Putnam Equity go up and down completely randomly.
Pair Corralation between Putnam Income and Putnam Equity
Assuming the 90 days horizon Putnam Income is expected to generate 3.99 times less return on investment than Putnam Equity. But when comparing it to its historical volatility, Putnam Income Fund is 1.94 times less risky than Putnam Equity. It trades about 0.18 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,693 in Putnam Equity Income on September 2, 2024 and sell it today you would earn a total of 201.00 from holding Putnam Equity Income or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Income Fund vs. Putnam Equity Income
Performance |
| Timeline |
| Putnam Income |
| Putnam Equity Income |
Putnam Income and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Income and Putnam Equity
The main advantage of trading using opposite Putnam Income and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Income position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.| Putnam Income vs. Putnam Equity Income | Putnam Income vs. Putnam Tax Exempt | Putnam Income vs. Putnam Floating Rate | Putnam Income vs. Putnam High Yield |
| Putnam Equity vs. Putnam Growth Opportunities | Putnam Equity vs. Putnam International Equity | Putnam Equity vs. George Putnam Fund | Putnam Equity vs. Putnam Multi Cap Growth |
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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