Correlation Between Tax Free and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both Tax Free and Putnam Growth 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 Tax Free and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Free Conservative Income and Putnam Growth Opportunities, you can compare the effects of market volatilities on Tax Free and Putnam Growth 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 Tax Free with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax Free and Putnam Growth.
Diversification Opportunities for Tax Free and Putnam Growth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tax and Putnam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tax Free Conservative Income and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport and Tax Free 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 Tax Free Conservative Income are associated (or correlated) with Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of Tax Free i.e., Tax Free and Putnam Growth go up and down completely randomly.
Pair Corralation between Tax Free and Putnam Growth
Assuming the 90 days horizon Tax Free Conservative Income is expected to generate 0.03 times more return on investment than Putnam Growth. However, Tax Free Conservative Income is 33.32 times less risky than Putnam Growth. It trades about 0.3 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about -0.04 per unit of risk. If you would invest 998.00 in Tax Free Conservative Income on September 13, 2024 and sell it today you would earn a total of 3.00 from holding Tax Free Conservative Income or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tax Free Conservative Income vs. Putnam Growth Opportunities
Performance |
| Timeline |
| Tax Free Conservative |
| Putnam Growth Opport |
Tax Free and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax Free and Putnam Growth
The main advantage of trading using opposite Tax Free and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax Free position performs unexpectedly, Putnam Growth 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 Growth will offset losses from the drop in Putnam Growth's long position.| Tax Free vs. Allianzgi Convertible Income | Tax Free vs. Calamos Dynamic Convertible | Tax Free vs. Rationalpier 88 Convertible | Tax Free vs. Fidelity Sai Convertible |
| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Tax Exempt | Putnam Growth vs. Putnam Floating Rate | Putnam Growth vs. Putnam High Yield |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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