Correlation Between Us Government and Putnam High
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Putnam High Yield, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Putnam High.
Diversification Opportunities for Us Government and Putnam High
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UGSDX and Putnam is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us 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 Us Government Securities 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 Us Government i.e., Us Government and Putnam High go up and down completely randomly.
Pair Corralation between Us Government and Putnam High
Assuming the 90 days horizon Us Government Securities is expected to generate 0.56 times more return on investment than Putnam High. However, Us Government Securities is 1.78 times less risky than Putnam High. It trades about 0.12 of its potential returns per unit of risk. Putnam High Yield is currently generating about 0.02 per unit of risk. If you would invest 192.00 in Us Government Securities on December 30, 2024 and sell it today you would earn a total of 3.00 from holding Us Government Securities or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Putnam High Yield
Performance |
| Timeline |
| Us Government Securities |
| Putnam High Yield |
Us Government and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Putnam High
The main advantage of trading using opposite Us Government and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Us Government Securities | ||
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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