Correlation Between Dupont De and Putnam High

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

By analyzing existing cross correlation between Dupont De Nemours and Putnam High Yield, you can compare the effects of market volatilities on Dupont De and Putnam High 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 Dupont De with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Putnam High.

Diversification Opportunities for Dupont De and Putnam High

-0.24

Correlation Coefficient

Dupont De  Putnam High

Very good diversification

The 3 months correlation between Dupont and Putnam is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield and Dupont De 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 Dupont De Nemours are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Yield has no effect on the direction of Dupont De i.e., Dupont De and Putnam High go up and down completely randomly.

Pair Corralation between Dupont De and Putnam High

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.02 times less return on investment than Putnam High. In addition to that, Dupont De is 5.28 times more volatile than Putnam High Yield. It trades about 0.04 of its total potential returns per unit of risk. Putnam High Yield is currently generating about 0.24 per unit of volatility. If you would invest  565.00  in Putnam High Yield on October 23, 2024 and sell it today you would earn a total of  5.00  from holding Putnam High Yield or generate 0.88% return on investment over 90 days.

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

Dupont De Nemours  vs.  Putnam High Yield

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Putnam High Yield

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam High Yield are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Putnam High

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

The idea behind Dupont De Nemours and Putnam High Yield 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.