Correlation Between Putnam Convertible and California Bond
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Putnam Convertible and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and California Bond.
Diversification Opportunities for Putnam Convertible and California Bond
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Putnam and California is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and California Bond go up and down completely randomly.
Pair Corralation between Putnam Convertible and California Bond
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 1.68 times more return on investment than California Bond. However, Putnam Convertible is 1.68 times more volatile than California Bond Fund. It trades about 0.33 of its potential returns per unit of risk. California Bond Fund is currently generating about 0.06 per unit of risk. If you would invest 2,371 in Putnam Convertible Incm Gwth on August 31, 2024 and sell it today you would earn a total of 246.00 from holding Putnam Convertible Incm Gwth or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Incm Gwth vs. California Bond Fund
Performance |
| Timeline |
| Putnam Convertible Incm |
| California Bond |
Putnam Convertible and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and California Bond
The main advantage of trading using opposite Putnam Convertible and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Putnam Convertible vs. Mfs Technology Fund | Putnam Convertible vs. Science Technology Fund | Putnam Convertible vs. Biotechnology Ultrasector Profund | Putnam Convertible vs. Technology Ultrasector Profund |
| California Bond vs. Aqr Risk Balanced Modities | California Bond vs. California High Yield Municipal | California Bond vs. Ab High Income | California Bond vs. Pace High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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