Correlation Between Ford and Putnam Dynamic
Can any of the company-specific risk be diversified away by investing in both Ford and Putnam Dynamic 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 Ford and Putnam Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Putnam Dynamic Asset, you can compare the effects of market volatilities on Ford and Putnam Dynamic 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 Ford with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Putnam Dynamic.
Diversification Opportunities for Ford and Putnam Dynamic
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Putnam is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Putnam Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Dynamic Asset and Ford 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 Ford Motor are associated (or correlated) with Putnam Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Dynamic Asset has no effect on the direction of Ford i.e., Ford and Putnam Dynamic go up and down completely randomly.
Pair Corralation between Ford and Putnam Dynamic
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Putnam Dynamic. In addition to that, Ford is 5.39 times more volatile than Putnam Dynamic Asset. It trades about -0.04 of its total potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.1 per unit of volatility. If you would invest 1,072 in Putnam Dynamic Asset on December 3, 2024 and sell it today you would earn a total of 9.00 from holding Putnam Dynamic Asset or generate 0.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Putnam Dynamic Asset
Performance |
Timeline |
Ford Motor |
Putnam Dynamic Asset |
Ford and Putnam Dynamic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Putnam Dynamic
The main advantage of trading using opposite Ford and Putnam Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Putnam Dynamic 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 Dynamic will offset losses from the drop in Putnam Dynamic's long position.The idea behind Ford Motor and Putnam Dynamic Asset 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.Putnam Dynamic vs. Franklin Vertible Securities | Putnam Dynamic vs. Invesco Vertible Securities | Putnam Dynamic vs. Calamos Vertible Fund | Putnam Dynamic vs. Advent Claymore Convertible |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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