Correlation Between Putnam Convertible and Payden Floating
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Payden Floating 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 Payden Floating 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 Payden Floating Rate, you can compare the effects of market volatilities on Putnam Convertible and Payden Floating 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 Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Payden Floating.
Diversification Opportunities for Putnam Convertible and Payden Floating
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Payden is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate 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 Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Payden Floating go up and down completely randomly.
Pair Corralation between Putnam Convertible and Payden Floating
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 3.52 times more return on investment than Payden Floating. However, Putnam Convertible is 3.52 times more volatile than Payden Floating Rate. It trades about 0.53 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.1 per unit of risk. If you would invest 2,474 in Putnam Convertible Incm Gwth on September 1, 2024 and sell it today you would earn a total of 151.00 from holding Putnam Convertible Incm Gwth or generate 6.1% 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. Payden Floating Rate
Performance |
| Timeline |
| Putnam Convertible Incm |
| Payden Floating Rate |
Putnam Convertible and Payden Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Payden Floating
The main advantage of trading using opposite Putnam Convertible and Payden Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Payden Floating 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 Payden Floating will offset losses from the drop in Payden Floating'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 |
| Payden Floating vs. Vanguard Total Stock | Payden Floating vs. Vanguard 500 Index | Payden Floating vs. Vanguard Total Stock | Payden Floating vs. Vanguard Total Stock |
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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