Correlation Between Us Government and Putnam Ohio

Can any of the company-specific risk be diversified away by investing in both Us Government and Putnam Ohio 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 Us Government and Putnam Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Us Government Securities and Putnam Ohio Tax, you can compare the effects of market volatilities on Us Government and Putnam Ohio 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 Us Government with a short position of Putnam Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Putnam Ohio.

Diversification Opportunities for Us Government and Putnam Ohio

0.68

Correlation Coefficient

Us Government  Putnam Ohio

Poor diversification

The 3 months correlation between AMUSX and Putnam is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Putnam Ohio Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Ohio Tax and Us Government 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 Us Government Securities are associated (or correlated) with Putnam Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Ohio Tax has no effect on the direction of Us Government i.e., Us Government and Putnam Ohio go up and down completely randomly.

Pair Corralation between Us Government and Putnam Ohio

Assuming the 90 days horizon Us Government Securities is expected to under-perform the Putnam Ohio. In addition to that, Us Government is 1.06 times more volatile than Putnam Ohio Tax. It trades about -0.08 of its total potential returns per unit of risk. Putnam Ohio Tax is currently generating about -0.02 per unit of volatility. If you would invest  837.00  in Putnam Ohio Tax on October 6, 2024 and sell it today you would lose (2.00) from holding Putnam Ohio Tax or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Us Government Securities  vs.  Putnam Ohio Tax

Us Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Government Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Us Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Ohio Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Ohio Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Putnam Ohio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Government and Putnam Ohio

The main advantage of trading using opposite Us Government and Putnam Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Putnam Ohio 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 Ohio will offset losses from the drop in Putnam Ohio's long position.

The idea behind Us Government Securities and Putnam Ohio Tax 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.