Correlation Between Western Asset and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Western Asset and Putnam Global 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 Asset and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Putnam Global Incm, you can compare the effects of market volatilities on Western Asset and Putnam Global 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 Asset with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Putnam Global.
Diversification Opportunities for Western Asset and Putnam Global
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Putnam is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Putnam Global Incm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Incm and Western Asset 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 Asset Municipal are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Incm has no effect on the direction of Western Asset i.e., Western Asset and Putnam Global go up and down completely randomly.
Pair Corralation between Western Asset and Putnam Global
Assuming the 90 days horizon Western Asset is expected to generate 1.32 times less return on investment than Putnam Global. In addition to that, Western Asset is 1.37 times more volatile than Putnam Global Incm. It trades about 0.19 of its total potential returns per unit of risk. Putnam Global Incm is currently generating about 0.35 per unit of volatility. If you would invest 999.00 in Putnam Global Incm on September 14, 2024 and sell it today you would earn a total of 11.00 from holding Putnam Global Incm or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Putnam Global Incm
Performance |
| Timeline |
| Western Asset Municipal |
| Putnam Global Incm |
Western Asset and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Putnam Global
The main advantage of trading using opposite Western Asset and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Putnam Global 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 Global will offset losses from the drop in Putnam Global's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Putnam Global vs. Heartland Value Plus | Putnam Global vs. Palm Valley Capital | Putnam Global vs. Queens Road Small | Putnam Global vs. Royce Opportunity Fund |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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