Correlation Between Inverse Government and Putnam Short
Can any of the company-specific risk be diversified away by investing in both Inverse Government and Putnam Short 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 Inverse Government and Putnam Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Government Long and Putnam Short Duration, you can compare the effects of market volatilities on Inverse Government and Putnam Short 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 Inverse Government with a short position of Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Government and Putnam Short.
Diversification Opportunities for Inverse Government and Putnam Short
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inverse and Putnam is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and Putnam Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Short Duration and Inverse Government 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 Inverse Government Long are associated (or correlated) with Putnam Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Short Duration has no effect on the direction of Inverse Government i.e., Inverse Government and Putnam Short go up and down completely randomly.
Pair Corralation between Inverse Government and Putnam Short
Assuming the 90 days horizon Inverse Government Long is expected to generate 13.2 times more return on investment than Putnam Short. However, Inverse Government is 13.2 times more volatile than Putnam Short Duration. It trades about 0.12 of its potential returns per unit of risk. Putnam Short Duration is currently generating about 0.07 per unit of risk. If you would invest 18,143 in Inverse Government Long on September 3, 2024 and sell it today you would earn a total of 839.00 from holding Inverse Government Long or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Government Long vs. Putnam Short Duration
Performance |
| Timeline |
| Inverse Government Long |
| Putnam Short Duration |
Inverse Government and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Government and Putnam Short
The main advantage of trading using opposite Inverse Government and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government position performs unexpectedly, Putnam Short 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 Short will offset losses from the drop in Putnam Short's long position.| Inverse Government vs. Dana Large Cap | Inverse Government vs. Pace Large Value | Inverse Government vs. Siit Large Cap | Inverse Government vs. American Mutual Fund |
| Putnam Short vs. Us Government Securities | Putnam Short vs. Franklin Adjustable Government | Putnam Short vs. Fidelity Series Government | Putnam Short vs. Inverse Government Long |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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