Correlation Between Health Care and Putnam High
Can any of the company-specific risk be diversified away by investing in both Health Care and Putnam High 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 Health Care and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Fund and Putnam High Yield, you can compare the effects of market volatilities on Health Care and Putnam High 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 Health Care with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Putnam High.
Diversification Opportunities for Health Care and Putnam High
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Health and Putnam is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield and Health Care 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 Health Care Fund are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Yield has no effect on the direction of Health Care i.e., Health Care and Putnam High go up and down completely randomly.
Pair Corralation between Health Care and Putnam High
Assuming the 90 days horizon Health Care Fund is expected to generate 5.47 times more return on investment than Putnam High. However, Health Care is 5.47 times more volatile than Putnam High Yield. It trades about 0.1 of its potential returns per unit of risk. Putnam High Yield is currently generating about 0.22 per unit of risk. If you would invest 3,608 in Health Care Fund on September 1, 2024 and sell it today you would earn a total of 68.00 from holding Health Care Fund or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Health Care Fund vs. Putnam High Yield
Performance |
| Timeline |
| Health Care Fund |
| Putnam High Yield |
Health Care and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Putnam High
The main advantage of trading using opposite Health Care and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Putnam High 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 High will offset losses from the drop in Putnam High's long position.| Health Care vs. Banking Fund Class | Health Care vs. Basic Materials Fund | Health Care vs. Biotechnology Fund Class | Health Care vs. Government Long Bond |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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