Correlation Between Smallcap Fund and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Putnam Convertible 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 Smallcap Fund and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Putnam Convertible Securities, you can compare the effects of market volatilities on Smallcap Fund and Putnam Convertible 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 Smallcap Fund with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Putnam Convertible.
Diversification Opportunities for Smallcap Fund and Putnam Convertible
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Putnam is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Putnam Convertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Putnam Convertible go up and down completely randomly.
Pair Corralation between Smallcap Fund and Putnam Convertible
Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.65 times more return on investment than Putnam Convertible. However, Smallcap Fund is 1.65 times more volatile than Putnam Convertible Securities. It trades about 0.11 of its potential returns per unit of risk. Putnam Convertible Securities is currently generating about 0.14 per unit of risk. If you would invest 2,577 in Smallcap Fund Fka on November 6, 2024 and sell it today you would earn a total of 59.00 from holding Smallcap Fund Fka or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Putnam Convertible Securities
Performance |
| Timeline |
| Smallcap Fund Fka |
| Putnam Convertible |
Smallcap Fund and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Putnam Convertible
The main advantage of trading using opposite Smallcap Fund and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible's long position.| Smallcap Fund vs. Doubleline Core Fixed | Smallcap Fund vs. Artisan Select Equity | Smallcap Fund vs. T Rowe Price | Smallcap Fund vs. Old Westbury Fixed |
| Putnam Convertible vs. Rationalpier 88 Convertible | Putnam Convertible vs. Calamos Dynamic Convertible | Putnam Convertible vs. Advent Claymore Convertible | Putnam Convertible vs. Fidelity Sai Convertible |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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