Correlation Between Putnam Convertible and Large Cap
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Large Cap 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 Large Cap 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 Large Cap International, you can compare the effects of market volatilities on Putnam Convertible and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Large Cap.
Diversification Opportunities for Putnam Convertible and Large Cap
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and Large is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Large Cap International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap International 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap International has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Large Cap go up and down completely randomly.
Pair Corralation between Putnam Convertible and Large Cap
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.44 times less return on investment than Large Cap. But when comparing it to its historical volatility, Putnam Convertible Incm Gwth is 1.19 times less risky than Large Cap. It trades about 0.09 of its potential returns per unit of risk. Large Cap International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,742 in Large Cap International on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Large Cap International or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. Large Cap International
Performance |
| Timeline |
| Putnam Convertible Incm |
| Large Cap International |
Putnam Convertible and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Large Cap
The main advantage of trading using opposite Putnam Convertible and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Putnam Convertible vs. Legg Mason Global | Putnam Convertible vs. Scharf Global Opportunity | Putnam Convertible vs. Siit Global Managed | Putnam Convertible vs. Ab Global Risk |
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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 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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