Correlation Between Golub Capital and Putnam Managed

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

By analyzing existing cross correlation between Golub Capital BDC and Putnam Managed Municipal, you can compare the effects of market volatilities on Golub Capital and Putnam Managed 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 Golub Capital with a short position of Putnam Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golub Capital and Putnam Managed.

Diversification Opportunities for Golub Capital and Putnam Managed

-0.4

Correlation Coefficient

Golub Capital  Putnam Managed

Very good diversification

The 3 months correlation between Golub and Putnam is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC and Putnam Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Managed Municipal and Golub Capital 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 Golub Capital BDC are associated (or correlated) with Putnam Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Managed Municipal has no effect on the direction of Golub Capital i.e., Golub Capital and Putnam Managed go up and down completely randomly.

Pair Corralation between Golub Capital and Putnam Managed

Given the investment horizon of 90 days Golub Capital BDC is expected to generate 1.14 times more return on investment than Putnam Managed. However, Golub Capital is 1.14 times more volatile than Putnam Managed Municipal. It trades about 0.06 of its potential returns per unit of risk. Putnam Managed Municipal is currently generating about -0.08 per unit of risk. If you would invest  1,462  in Golub Capital BDC on September 15, 2024 and sell it today you would earn a total of  43.00  from holding Golub Capital BDC or generate 2.94% return on investment over 90 days.

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

Golub Capital BDC  vs.  Putnam Managed Municipal

Golub Capital BDC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Golub Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Putnam Managed Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Managed Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Putnam Managed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Golub Capital and Putnam Managed

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

The idea behind Golub Capital BDC and Putnam Managed Municipal 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.