Correlation Between Putnam Convertible and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Washington Mutual 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 Washington Mutual 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 Washington Mutual Investors, you can compare the effects of market volatilities on Putnam Convertible and Washington Mutual 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Washington Mutual.
Diversification Opportunities for Putnam Convertible and Washington Mutual
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Washington is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual 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 Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Washington Mutual go up and down completely randomly.
Pair Corralation between Putnam Convertible and Washington Mutual
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 0.77 times more return on investment than Washington Mutual. However, Putnam Convertible Incm Gwth is 1.3 times less risky than Washington Mutual. It trades about 0.53 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.27 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. Washington Mutual Investors
Performance |
| Timeline |
| Putnam Convertible Incm |
| Washington Mutual |
Putnam Convertible and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Washington Mutual
The main advantage of trading using opposite Putnam Convertible and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual'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 |
| Washington Mutual vs. Income Fund Of | Washington Mutual vs. New World Fund | Washington Mutual vs. American Mutual Fund | Washington Mutual vs. American Mutual Fund |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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