Correlation Between Putnam Convertible and American Growth
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and American Growth 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 Convertible and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Convertible Incm Gwth and American Growth Fund, you can compare the effects of market volatilities on Putnam Convertible and American Growth 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 Convertible with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and American Growth.
Diversification Opportunities for Putnam Convertible and American Growth
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Putnam and American is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Putnam Convertible 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 Convertible Incm Gwth are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and American Growth go up and down completely randomly.
Pair Corralation between Putnam Convertible and American Growth
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 0.46 times more return on investment than American Growth. However, Putnam Convertible Incm Gwth is 2.18 times less risky than American Growth. It trades about 0.11 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.01 per unit of risk. If you would invest 2,232 in Putnam Convertible Incm Gwth on October 22, 2024 and sell it today you would earn a total of 330.00 from holding Putnam Convertible Incm Gwth or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. American Growth Fund
Performance |
| Timeline |
| Putnam Convertible Incm |
| American Growth |
Putnam Convertible and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and American Growth
The main advantage of trading using opposite Putnam Convertible and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, American Growth 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 American Growth will offset losses from the drop in American Growth's long position.| Putnam Convertible vs. Multisector Bond Sma | Putnam Convertible vs. Ab Bond Inflation | Putnam Convertible vs. Gmo High Yield | Putnam Convertible vs. Federated High Yield |
| American Growth vs. T Rowe Price | American Growth vs. Dreyfusstandish Global Fixed | American Growth vs. Smallcap World Fund | American Growth vs. Gmo Global Equity |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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