Correlation Between Putnam U and Putnam Tax
Can any of the company-specific risk be diversified away by investing in both Putnam U and Putnam Tax 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 U and Putnam Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam U S and Putnam Tax Exempt, you can compare the effects of market volatilities on Putnam U and Putnam Tax 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 U with a short position of Putnam Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam U and Putnam Tax.
Diversification Opportunities for Putnam U and Putnam Tax
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Putnam U S and Putnam Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Tax Exempt and Putnam U 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 U S are associated (or correlated) with Putnam Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Tax Exempt has no effect on the direction of Putnam U i.e., Putnam U and Putnam Tax go up and down completely randomly.
Pair Corralation between Putnam U and Putnam Tax
Assuming the 90 days horizon Putnam U S is expected to generate 1.27 times more return on investment than Putnam Tax. However, Putnam U is 1.27 times more volatile than Putnam Tax Exempt. It trades about 0.16 of its potential returns per unit of risk. Putnam Tax Exempt is currently generating about 0.2 per unit of risk. If you would invest 818.00 in Putnam U S on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Putnam U S or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam U S vs. Putnam Tax Exempt
Performance |
| Timeline |
| Putnam U S |
| Putnam Tax Exempt |
Putnam U and Putnam Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam U and Putnam Tax
The main advantage of trading using opposite Putnam U and Putnam Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam U position performs unexpectedly, Putnam Tax 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 Tax will offset losses from the drop in Putnam Tax's long position.| Putnam U vs. Putnam Equity Income | Putnam U vs. Putnam Tax Exempt | Putnam U vs. Putnam Floating Rate | Putnam U vs. Putnam High Yield |
| Putnam Tax vs. American Century Investment | Putnam Tax vs. Meeder Funds | Putnam Tax vs. Prudential Government Money | Putnam Tax vs. John Hancock Money |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |