Correlation Between Versatile Bond and Putnam International
Can any of the company-specific risk be diversified away by investing in both Versatile Bond and Putnam International 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 Versatile Bond and Putnam International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and Putnam International Capital, you can compare the effects of market volatilities on Versatile Bond and Putnam International 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 Versatile Bond with a short position of Putnam International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Putnam International.
Diversification Opportunities for Versatile Bond and Putnam International
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Versatile and Putnam is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Putnam International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International and Versatile Bond 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 Versatile Bond Portfolio are associated (or correlated) with Putnam International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam International has no effect on the direction of Versatile Bond i.e., Versatile Bond and Putnam International go up and down completely randomly.
Pair Corralation between Versatile Bond and Putnam International
Assuming the 90 days horizon Versatile Bond is expected to generate 1.29 times less return on investment than Putnam International. But when comparing it to its historical volatility, Versatile Bond Portfolio is 6.25 times less risky than Putnam International. It trades about 0.2 of its potential returns per unit of risk. Putnam International Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,862 in Putnam International Capital on September 14, 2024 and sell it today you would earn a total of 292.00 from holding Putnam International Capital or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Putnam International Capital
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Putnam International |
Versatile Bond and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and Putnam International
The main advantage of trading using opposite Versatile Bond and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond position performs unexpectedly, Putnam International 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 Putnam International will offset losses from the drop in Putnam International's long position.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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