Correlation Between Putnam Convertible and American Funds
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and American Funds 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 American Funds 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 American Funds 2050, you can compare the effects of market volatilities on Putnam Convertible and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and American Funds.
Diversification Opportunities for Putnam Convertible and American Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and American Funds 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2050 has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and American Funds go up and down completely randomly.
Pair Corralation between Putnam Convertible and American Funds
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.51 times less return on investment than American Funds. But when comparing it to its historical volatility, Putnam Convertible Incm Gwth is 1.29 times less risky than American Funds. It trades about 0.09 of its potential returns per unit of risk. American Funds 2050 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,530 in American Funds 2050 on September 13, 2024 and sell it today you would earn a total of 643.00 from holding American Funds 2050 or generate 42.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. American Funds 2050
Performance |
| Timeline |
| Putnam Convertible Incm |
| American Funds 2050 |
Putnam Convertible and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and American Funds
The main advantage of trading using opposite Putnam Convertible and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Rationalpier 88 Convertible | American Funds vs. Calamos Dynamic Convertible | American Funds vs. Putnam Convertible Incm Gwth | American Funds vs. Allianzgi Convertible Income |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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