Correlation Between Eaton Vance and Putnam Convertible

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

By analyzing existing cross correlation between Eaton Vance Global and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Eaton Vance 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 Eaton Vance with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Putnam Convertible.

Diversification Opportunities for Eaton Vance and Putnam Convertible

0.48

Correlation Coefficient

Eaton Vance  Putnam Convertible

Very weak diversification

The 3 months correlation between Eaton and Putnam is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Global and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and Eaton Vance 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 Eaton Vance Global 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 Convertible Incm has no effect on the direction of Eaton Vance i.e., Eaton Vance and Putnam Convertible go up and down completely randomly.

Pair Corralation between Eaton Vance and Putnam Convertible

Assuming the 90 days horizon Eaton Vance is expected to generate 2.73 times less return on investment than Putnam Convertible. But when comparing it to its historical volatility, Eaton Vance Global is 1.48 times less risky than Putnam Convertible. It trades about 0.05 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,154  in Putnam Convertible Incm Gwth on October 4, 2024 and sell it today you would earn a total of  356.00  from holding Putnam Convertible Incm Gwth or generate 16.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Eaton Vance Global  vs.  Putnam Convertible Incm Gwth

Eaton Vance Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Convertible Incm

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Eaton Vance and Putnam Convertible

The main advantage of trading using opposite Eaton Vance and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance 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 Eaton Vance Global and Putnam Convertible Incm Gwth 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.