Correlation Between Chartwell Small and Putnam Convertible

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

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

Diversification Opportunities for Chartwell Small and Putnam Convertible

0.81

Correlation Coefficient

Chartwell Small  Putnam Convertible

Very poor diversification

The 3 months correlation between Chartwell and Putnam is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chartwell Small Cap and Putnam Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Vertible Secu and Chartwell Small 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 Chartwell Small Cap 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 Vertible Secu has no effect on the direction of Chartwell Small i.e., Chartwell Small and Putnam Convertible go up and down completely randomly.

Pair Corralation between Chartwell Small and Putnam Convertible

Assuming the 90 days horizon Chartwell Small Cap is expected to under-perform the Putnam Convertible. In addition to that, Chartwell Small is 2.21 times more volatile than Putnam Vertible Securities. It trades about -0.13 of its total potential returns per unit of risk. Putnam Vertible Securities is currently generating about -0.08 per unit of volatility. If you would invest  2,584  in Putnam Vertible Securities on December 21, 2024 and sell it today you would lose (97.00) from holding Putnam Vertible Securities or give up 3.75% of portfolio value over 90 days.

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

Chartwell Small Cap  vs.  Putnam Vertible Securities

Chartwell Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chartwell Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Putnam Vertible Secu

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chartwell Small and Putnam Convertible

The main advantage of trading using opposite Chartwell Small and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chartwell Small 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.

The idea behind Chartwell Small Cap and Putnam Vertible Securities 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.