Correlation Between Putnam Convertible and Miller Opportunity
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Miller Opportunity 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 Miller Opportunity 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 Miller Opportunity Trust, you can compare the effects of market volatilities on Putnam Convertible and Miller Opportunity 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 Miller Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Miller Opportunity.
Diversification Opportunities for Putnam Convertible and Miller Opportunity
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Miller is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Miller Opportunity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Opportunity Trust 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 Miller Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Opportunity Trust has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Miller Opportunity go up and down completely randomly.
Pair Corralation between Putnam Convertible and Miller Opportunity
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.98 times less return on investment than Miller Opportunity. But when comparing it to its historical volatility, Putnam Convertible Incm Gwth is 2.23 times less risky than Miller Opportunity. It trades about 0.27 of its potential returns per unit of risk. Miller Opportunity Trust is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,924 in Miller Opportunity Trust on August 29, 2024 and sell it today you would earn a total of 476.00 from holding Miller Opportunity Trust or generate 12.13% 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. Miller Opportunity Trust
Performance |
| Timeline |
| Putnam Convertible Incm |
| Miller Opportunity Trust |
Putnam Convertible and Miller Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Miller Opportunity
The main advantage of trading using opposite Putnam Convertible and Miller Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Miller Opportunity 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 Miller Opportunity will offset losses from the drop in Miller Opportunity's long position.| Putnam Convertible vs. T Rowe Price | Putnam Convertible vs. Ppm High Yield | Putnam Convertible vs. Metropolitan West High | Putnam Convertible vs. California High Yield Municipal |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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