Correlation Between Western Asset and Putnam International
Can any of the company-specific risk be diversified away by investing in both Western Asset and Putnam International 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 International 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 International Capital, you can compare the effects of market volatilities on Western Asset and Putnam International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Putnam International.
Diversification Opportunities for Western Asset and Putnam International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Putnam is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Putnam International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam International has no effect on the direction of Western Asset i.e., Western Asset and Putnam International go up and down completely randomly.
Pair Corralation between Western Asset and Putnam International
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Putnam International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 3.29 times less risky than Putnam International. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Putnam International Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,862 in Putnam International Capital on September 14, 2024 and sell it today you would earn a total of 292.00 from holding Putnam International Capital or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Putnam International Capital
Performance |
| Timeline |
| Western Asset Municipal |
| Putnam International |
Western Asset and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Putnam International
The main advantage of trading using opposite Western Asset and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Putnam International 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 International will offset losses from the drop in Putnam International'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 |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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