Correlation Between Tax-managed and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Tax-managed and Putnam Floating 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 Tax-managed and Putnam Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Managed Large Cap and Putnam Floating Rate, you can compare the effects of market volatilities on Tax-managed and Putnam Floating 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 Tax-managed with a short position of Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Putnam Floating.
Diversification Opportunities for Tax-managed and Putnam Floating
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tax-managed and Putnam is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Large Cap and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate and Tax-managed 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 Tax Managed Large Cap are associated (or correlated) with Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Tax-managed i.e., Tax-managed and Putnam Floating go up and down completely randomly.
Pair Corralation between Tax-managed and Putnam Floating
Assuming the 90 days horizon Tax Managed Large Cap is expected to generate 4.54 times more return on investment than Putnam Floating. However, Tax-managed is 4.54 times more volatile than Putnam Floating Rate. It trades about 0.1 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.18 per unit of risk. If you would invest 6,094 in Tax Managed Large Cap on November 5, 2024 and sell it today you would earn a total of 2,590 from holding Tax Managed Large Cap or generate 42.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tax Managed Large Cap vs. Putnam Floating Rate
Performance |
| Timeline |
| Tax Managed Large |
| Putnam Floating Rate |
Tax-managed and Putnam Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax-managed and Putnam Floating
The main advantage of trading using opposite Tax-managed and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-managed position performs unexpectedly, Putnam Floating 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 Floating will offset losses from the drop in Putnam Floating's long position.| Tax-managed vs. Ab Bond Inflation | Tax-managed vs. T Rowe Price | Tax-managed vs. Old Westbury California | Tax-managed vs. Touchstone Ultra Short |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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