Correlation Between Putnam Convertible and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Fidelity Freedom 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 Fidelity Freedom 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 Fidelity Freedom 2050, you can compare the effects of market volatilities on Putnam Convertible and Fidelity Freedom 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 Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Fidelity Freedom.
Diversification Opportunities for Putnam Convertible and Fidelity Freedom
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Fidelity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Fidelity Freedom 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2050 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 Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom 2050 has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Putnam Convertible and Fidelity Freedom
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 0.71 times more return on investment than Fidelity Freedom. However, Putnam Convertible Incm Gwth is 1.42 times less risky than Fidelity Freedom. It trades about 0.2 of its potential returns per unit of risk. Fidelity Freedom 2050 is currently generating about 0.08 per unit of risk. If you would invest 2,287 in Putnam Convertible Incm Gwth on September 1, 2024 and sell it today you would earn a total of 338.00 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. Fidelity Freedom 2050
Performance |
| Timeline |
| Putnam Convertible Incm |
| Fidelity Freedom 2050 |
Putnam Convertible and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Fidelity Freedom
The main advantage of trading using opposite Putnam Convertible and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Fidelity Freedom 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 Fidelity Freedom will offset losses from the drop in Fidelity Freedom's long position.| Putnam Convertible vs. Putnam Equity Income | Putnam Convertible vs. Putnam Tax Exempt | Putnam Convertible vs. Putnam Floating Rate | Putnam Convertible vs. Putnam Floating Rate |
| Fidelity Freedom vs. Aqr Sustainable Long Short | Fidelity Freedom vs. Franklin Federal Limited Term | Fidelity Freedom vs. The Short Term | Fidelity Freedom vs. Ab Select Longshort |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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