Correlation Between Putnam Convertible and Nuveen Quality

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Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Nuveen Quality 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 Nuveen Quality 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 Nuveen Quality Municipal, you can compare the effects of market volatilities on Putnam Convertible and Nuveen Quality 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 Nuveen Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Nuveen Quality.

Diversification Opportunities for Putnam Convertible and Nuveen Quality

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Putnam and Nuveen is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Nuveen Quality Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Quality Municipal 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 Nuveen Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Quality Municipal has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Nuveen Quality go up and down completely randomly.

Pair Corralation between Putnam Convertible and Nuveen Quality

Assuming the 90 days horizon Putnam Convertible is expected to generate 1.14 times less return on investment than Nuveen Quality. In addition to that, Putnam Convertible is 2.37 times more volatile than Nuveen Quality Municipal. It trades about 0.09 of its total potential returns per unit of risk. Nuveen Quality Municipal is currently generating about 0.26 per unit of volatility. If you would invest  1,291  in Nuveen Quality Municipal on September 13, 2024 and sell it today you would earn a total of  16.00  from holding Nuveen Quality Municipal or generate 1.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Putnam Convertible Incm Gwth  vs.  Nuveen Quality Municipal

 Performance 
       Timeline  
Putnam Convertible Incm 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Putnam Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Nuveen Quality Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nuveen Quality Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nuveen Quality is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Convertible and Nuveen Quality Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Putnam Convertible and Nuveen Quality

The main advantage of trading using opposite Putnam Convertible and Nuveen Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Nuveen Quality 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 Nuveen Quality will offset losses from the drop in Nuveen Quality's long position.
The idea behind Putnam Convertible Incm Gwth and Nuveen Quality Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.

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