Correlation Between Putnam Convertible and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Timothy Plan 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 Timothy Plan 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 Timothy Plan Growth, you can compare the effects of market volatilities on Putnam Convertible and Timothy Plan 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 Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Timothy Plan.
Diversification Opportunities for Putnam Convertible and Timothy Plan
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Timothy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Timothy Plan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Growth 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan Growth has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Timothy Plan go up and down completely randomly.
Pair Corralation between Putnam Convertible and Timothy Plan
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 1.37 times more return on investment than Timothy Plan. However, Putnam Convertible is 1.37 times more volatile than Timothy Plan Growth. It trades about 0.2 of its potential returns per unit of risk. Timothy Plan Growth is currently generating about 0.15 per unit of risk. If you would invest 2,287 in Putnam Convertible Incm Gwth on August 30, 2024 and sell it today you would earn a total of 330.00 from holding Putnam Convertible Incm Gwth or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. Timothy Plan Growth
Performance |
| Timeline |
| Putnam Convertible Incm |
| Timothy Plan Growth |
Putnam Convertible and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Timothy Plan
The main advantage of trading using opposite Putnam Convertible and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Timothy Plan 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 Timothy Plan will offset losses from the drop in Timothy Plan'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 High Yield |
| Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Plan Growth | Timothy Plan vs. Timothy Plan Growth |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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