Correlation Between Western Asset and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Western Asset and Putnam Convertible 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 Convertible 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 Convertible Incm Gwth, you can compare the effects of market volatilities on Western Asset and Putnam Convertible 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 Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Putnam Convertible.
Diversification Opportunities for Western Asset and Putnam Convertible
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Putnam is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible 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 Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Western Asset i.e., Western Asset and Putnam Convertible go up and down completely randomly.
Pair Corralation between Western Asset and Putnam Convertible
Assuming the 90 days horizon Western Asset is expected to generate 12.44 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, Western Asset Municipal is 2.02 times less risky than Putnam Convertible. It trades about 0.03 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,544 in Putnam Convertible Incm Gwth on September 15, 2024 and sell it today you would earn a total of 45.00 from holding Putnam Convertible Incm Gwth or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| Western Asset Municipal |
| Putnam Convertible Incm |
Western Asset and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Putnam Convertible
The main advantage of trading using opposite Western Asset and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible'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 Convertible vs. The National Tax Free | Putnam Convertible vs. Artisan High Income | Putnam Convertible vs. Ft 9331 Corporate | Putnam Convertible vs. Western Asset Municipal |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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