Correlation Between BlackRock Science and Putnam Municipal

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

By analyzing existing cross correlation between BlackRock Science and and Putnam Municipal Opportunities, you can compare the effects of market volatilities on BlackRock Science and Putnam Municipal 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 BlackRock Science with a short position of Putnam Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Science and Putnam Municipal.

Diversification Opportunities for BlackRock Science and Putnam Municipal

-0.39

Correlation Coefficient

BlackRock Science  Putnam Municipal

Very good diversification

The 3 months correlation between BlackRock and Putnam is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Science and and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp and BlackRock Science 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 BlackRock Science and are associated (or correlated) with Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of BlackRock Science i.e., BlackRock Science and Putnam Municipal go up and down completely randomly.

Pair Corralation between BlackRock Science and Putnam Municipal

Given the investment horizon of 90 days BlackRock Science and is expected to generate 1.57 times more return on investment than Putnam Municipal. However, BlackRock Science is 1.57 times more volatile than Putnam Municipal Opportunities. It trades about 0.23 of its potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.06 per unit of risk. If you would invest  1,822  in BlackRock Science and on August 31, 2024 and sell it today you would earn a total of  310.00  from holding BlackRock Science and or generate 17.01% return on investment over 90 days.

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

BlackRock Science and  vs.  Putnam Municipal Opportunities

BlackRock Science

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Science and are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, BlackRock Science showed solid returns over the last few months and may actually be approaching a breakup point.

Putnam Municipal Opp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Municipal Opportunities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Putnam Municipal is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Science and Putnam Municipal

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

The idea behind BlackRock Science and and Putnam Municipal Opportunities 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..