Correlation Between American Beacon and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both American Beacon and Putnam Convertible 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 American Beacon and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Twentyfour and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on American Beacon and Putnam Convertible 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 American Beacon with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Putnam Convertible.
Diversification Opportunities for American Beacon and Putnam Convertible
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Putnam is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Twentyfour and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and American Beacon 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 American Beacon Twentyfour are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of American Beacon i.e., American Beacon and Putnam Convertible go up and down completely randomly.
Pair Corralation between American Beacon and Putnam Convertible
Assuming the 90 days horizon American Beacon is expected to generate 7.58 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, American Beacon Twentyfour is 6.24 times less risky than Putnam Convertible. It trades about 0.13 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,504 in Putnam Convertible Incm Gwth on September 13, 2024 and sell it today you would earn a total of 89.00 from holding Putnam Convertible Incm Gwth or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
American Beacon Twentyfour vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| American Beacon Twen |
| Putnam Convertible Incm |
American Beacon and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Putnam Convertible
The main advantage of trading using opposite American Beacon and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible's long position.| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
| Putnam Convertible vs. Legg Mason Global | Putnam Convertible vs. Scharf Global Opportunity | Putnam Convertible vs. Siit Global Managed | Putnam Convertible vs. Ab Global Risk |
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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