Correlation Between Putnam Convertible and Gotham Enhanced
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Gotham Enhanced 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 Gotham Enhanced 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 Gotham Enhanced 500, you can compare the effects of market volatilities on Putnam Convertible and Gotham Enhanced 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 Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Gotham Enhanced.
Diversification Opportunities for Putnam Convertible and Gotham Enhanced
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Gotham is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 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 Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Gotham Enhanced go up and down completely randomly.
Pair Corralation between Putnam Convertible and Gotham Enhanced
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.97 times less return on investment than Gotham Enhanced. But when comparing it to its historical volatility, Putnam Convertible Incm Gwth is 1.33 times less risky than Gotham Enhanced. It trades about 0.09 of its potential returns per unit of risk. Gotham Enhanced 500 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,143 in Gotham Enhanced 500 on September 12, 2024 and sell it today you would earn a total of 462.00 from holding Gotham Enhanced 500 or generate 40.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. Gotham Enhanced 500
Performance |
| Timeline |
| Putnam Convertible Incm |
| Gotham Enhanced 500 |
Putnam Convertible and Gotham Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Gotham Enhanced
The main advantage of trading using opposite Putnam Convertible and Gotham Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Gotham Enhanced 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 Gotham Enhanced will offset losses from the drop in Gotham Enhanced's long position.| Putnam Convertible vs. Sp Midcap Index | Putnam Convertible vs. Pnc Emerging Markets | Putnam Convertible vs. Ep Emerging Markets | Putnam Convertible vs. Ab All Market |
| Gotham Enhanced vs. Fulcrum Diversified Absolute | Gotham Enhanced vs. Global Diversified Income | Gotham Enhanced vs. Lord Abbett Diversified | Gotham Enhanced vs. Delaware Limited Term Diversified |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |