Correlation Between Xp and Putnam Master
Can any of the company-specific risk be diversified away by investing in both Xp and Putnam Master 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 Xp and Putnam Master into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Putnam Master Intermediate, you can compare the effects of market volatilities on Xp and Putnam Master 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 Xp with a short position of Putnam Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Putnam Master.
Diversification Opportunities for Xp and Putnam Master
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Putnam is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Putnam Master Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Master Interm and Xp 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 Xp Inc are associated (or correlated) with Putnam Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Master Interm has no effect on the direction of Xp i.e., Xp and Putnam Master go up and down completely randomly.
Pair Corralation between Xp and Putnam Master
Allowing for the 90-day total investment horizon Xp Inc is expected to generate 5.65 times more return on investment than Putnam Master. However, Xp is 5.65 times more volatile than Putnam Master Intermediate. It trades about 0.33 of its potential returns per unit of risk. Putnam Master Intermediate is currently generating about 0.13 per unit of risk. If you would invest 1,146 in Xp Inc on November 4, 2024 and sell it today you would earn a total of 219.00 from holding Xp Inc or generate 19.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. Putnam Master Intermediate
Performance |
| Timeline |
| Xp Inc |
| Putnam Master Interm |
Xp and Putnam Master Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Putnam Master
The main advantage of trading using opposite Xp and Putnam Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Putnam Master 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 Master will offset losses from the drop in Putnam Master's long position.The idea behind Xp Inc and Putnam Master Intermediate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Putnam Master vs. MFS High Income | Putnam Master vs. MFS Investment Grade | Putnam Master vs. Eaton Vance National | Putnam Master vs. MFS High Yield |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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