Correlation Between Putnam Convertible and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Regional Bank 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 Regional Bank 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 Regional Bank Fund, you can compare the effects of market volatilities on Putnam Convertible and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Regional Bank.
Diversification Opportunities for Putnam Convertible and Regional Bank
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Regional is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Regional Bank go up and down completely randomly.
Pair Corralation between Putnam Convertible and Regional Bank
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 0.66 times more return on investment than Regional Bank. However, Putnam Convertible Incm Gwth is 1.52 times less risky than Regional Bank. It trades about 0.09 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.04 per unit of risk. If you would invest 2,573 in Putnam Convertible Incm Gwth on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Putnam Convertible Incm Gwth or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. Regional Bank Fund
Performance |
| Timeline |
| Putnam Convertible Incm |
| Regional Bank |
Putnam Convertible and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Regional Bank
The main advantage of trading using opposite Putnam Convertible and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank'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 |
| Regional Bank vs. Putnam Convertible Incm Gwth | Regional Bank vs. Lord Abbett Convertible | Regional Bank vs. Allianzgi Convertible Income | Regional Bank vs. Calamos Dynamic Convertible |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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