Correlation Between Baron Health and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Baron Health and Putnam Floating 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 Baron Health and Putnam Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Putnam Floating Rate, you can compare the effects of market volatilities on Baron Health and Putnam Floating 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 Baron Health with a short position of Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Putnam Floating.
Diversification Opportunities for Baron Health and Putnam Floating
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Baron and Putnam is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate and Baron Health 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 Baron Health Care are associated (or correlated) with Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Baron Health i.e., Baron Health and Putnam Floating go up and down completely randomly.
Pair Corralation between Baron Health and Putnam Floating
Assuming the 90 days horizon Baron Health Care is expected to generate 8.0 times more return on investment than Putnam Floating. However, Baron Health is 8.0 times more volatile than Putnam Floating Rate. It trades about 0.06 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.03 per unit of risk. If you would invest 1,935 in Baron Health Care on December 2, 2024 and sell it today you would earn a total of 38.00 from holding Baron Health Care or generate 1.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Baron Health Care vs. Putnam Floating Rate
Performance |
Timeline |
Baron Health Care |
Putnam Floating Rate |
Baron Health and Putnam Floating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baron Health and Putnam Floating
The main advantage of trading using opposite Baron Health and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Putnam Floating 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 Floating will offset losses from the drop in Putnam Floating's long position.Baron Health vs. Columbia Global Technology | Baron Health vs. Global Technology Portfolio | Baron Health vs. Technology Ultrasector Profund | Baron Health vs. Firsthand Technology Opportunities |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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