Correlation Between Federated Ultrashort and Putnam Global

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

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

Diversification Opportunities for Federated Ultrashort and Putnam Global

0.87

Correlation Coefficient

Federated Ultrashort  Putnam Global

Very poor diversification

The 3 months correlation between Federated and Putnam is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Putnam Global Incm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Incm and Federated Ultrashort 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 Federated Ultrashort Bond are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Incm has no effect on the direction of Federated Ultrashort i.e., Federated Ultrashort and Putnam Global go up and down completely randomly.

Pair Corralation between Federated Ultrashort and Putnam Global

Assuming the 90 days horizon Federated Ultrashort Bond is expected to generate 0.5 times more return on investment than Putnam Global. However, Federated Ultrashort Bond is 2.02 times less risky than Putnam Global. It trades about 0.22 of its potential returns per unit of risk. Putnam Global Incm is currently generating about 0.09 per unit of risk. If you would invest  915.00  in Federated Ultrashort Bond on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Federated Ultrashort Bond or generate 1.53% return on investment over 90 days.

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

Federated Ultrashort Bond  vs.  Putnam Global Incm

Federated Ultrashort Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Ultrashort Bond are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Federated Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Global Incm

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Incm are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Putnam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Ultrashort and Putnam Global

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

The idea behind Federated Ultrashort Bond and Putnam Global Incm 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .