Correlation Between Aig Government and Putnman Retirement
Can any of the company-specific risk be diversified away by investing in both Aig Government and Putnman Retirement 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 Aig Government and Putnman Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Putnman Retirement Ready, you can compare the effects of market volatilities on Aig Government and Putnman Retirement 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 Aig Government with a short position of Putnman Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Putnman Retirement.
Diversification Opportunities for Aig Government and Putnman Retirement
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aig and Putnman is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Putnman Retirement Ready in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnman Retirement Ready and Aig 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 Aig Government Money are associated (or correlated) with Putnman Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnman Retirement Ready has no effect on the direction of Aig Government i.e., Aig Government and Putnman Retirement go up and down completely randomly.
Pair Corralation between Aig Government and Putnman Retirement
Assuming the 90 days horizon Aig Government is expected to generate 2.93 times less return on investment than Putnman Retirement. But when comparing it to its historical volatility, Aig Government Money is 2.75 times less risky than Putnman Retirement. It trades about 0.11 of its potential returns per unit of risk. Putnman Retirement Ready is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,517 in Putnman Retirement Ready on October 25, 2024 and sell it today you would earn a total of 22.00 from holding Putnman Retirement Ready or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Putnman Retirement Ready
Performance |
| Timeline |
| Aig Government Money |
| Putnman Retirement Ready |
Aig Government and Putnman Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Putnman Retirement
The main advantage of trading using opposite Aig Government and Putnman Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Putnman Retirement 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 Putnman Retirement will offset losses from the drop in Putnman Retirement's long position.| Aig Government vs. Virtus Seix Government | Aig Government vs. Alpine Ultra Short | Aig Government vs. Old Westbury Municipal | Aig Government vs. Intermediate Term Tax Free Bond |
| Putnman Retirement vs. Aig Government Money | Putnman Retirement vs. Schwab Government Money | Putnman Retirement vs. Virtus Seix Government | Putnman Retirement vs. Intermediate Government Bond |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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