Correlation Between Snap and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Putnam Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Putnam Floating Rate, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Putnam Floating.
Diversification Opportunities for Snap and Putnam Floating
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Putnam is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc 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 Snap 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 Snap Inc 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 Snap i.e., Snap and Putnam Floating go up and down completely randomly.
Pair Corralation between Snap and Putnam Floating
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Putnam Floating. In addition to that, Snap is 26.3 times more volatile than Putnam Floating Rate. It trades about -0.03 of its total potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.16 per unit of volatility. If you would invest 777.00 in Putnam Floating Rate on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Putnam Floating Rate or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Putnam Floating Rate
Performance |
| Timeline |
| Snap Inc |
| Putnam Floating Rate |
Snap and Putnam Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Putnam Floating
The main advantage of trading using opposite Snap and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and Putnam Floating Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Putnam Floating vs. Floating Rate Fund | Putnam Floating vs. Lord Abbett Inv | Putnam Floating vs. HUMANA INC | Putnam Floating vs. Aquagold International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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