Correlation Between Western Acquisition and Putnam Municipal
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Putnam Municipal 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 Western Acquisition and Putnam Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and Putnam Municipal Opportunities, you can compare the effects of market volatilities on Western Acquisition and Putnam Municipal 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 Western Acquisition with a short position of Putnam Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Putnam Municipal.
Diversification Opportunities for Western Acquisition and Putnam Municipal
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Putnam is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of Western Acquisition i.e., Western Acquisition and Putnam Municipal go up and down completely randomly.
Pair Corralation between Western Acquisition and Putnam Municipal
Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Putnam Municipal. In addition to that, Western Acquisition is 1.53 times more volatile than Putnam Municipal Opportunities. It trades about -0.03 of its total potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.1 per unit of volatility. If you would invest 1,032 in Putnam Municipal Opportunities on September 14, 2024 and sell it today you would earn a total of 20.00 from holding Putnam Municipal Opportunities or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Putnam Municipal Opportunities
Performance |
| Timeline |
| Western Acquisition |
| Putnam Municipal Opp |
Western Acquisition and Putnam Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Putnam Municipal
The main advantage of trading using opposite Western Acquisition and Putnam Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, Putnam Municipal 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 Municipal will offset losses from the drop in Putnam Municipal's long position.| Western Acquisition vs. Visa Class A | Western Acquisition vs. Diamond Hill Investment | Western Acquisition vs. Distoken Acquisition | Western Acquisition vs. AllianceBernstein Holding LP |
| Putnam Municipal vs. Invesco Municipal Income | Putnam Municipal vs. DWS Municipal Income | Putnam Municipal vs. MFS Municipal Income | Putnam Municipal vs. MFS High Income |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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