Correlation Between The Gabelli and Putnam Convertible

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

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

Diversification Opportunities for The Gabelli and Putnam Convertible

0.4

Correlation Coefficient

The Gabelli  Putnam Convertible

Very weak diversification

The 3 months correlation between The and Putnam is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Value 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 The Gabelli 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 The Gabelli Value 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 The Gabelli i.e., The Gabelli and Putnam Convertible go up and down completely randomly.

Pair Corralation between The Gabelli and Putnam Convertible

Assuming the 90 days horizon The Gabelli Value is expected to generate 1.59 times more return on investment than Putnam Convertible. However, The Gabelli is 1.59 times more volatile than Putnam Convertible Incm Gwth. It trades about -0.02 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about -0.08 per unit of risk. If you would invest  698.00  in The Gabelli Value on December 22, 2024 and sell it today you would lose (16.00) from holding The Gabelli Value or give up 2.29% of portfolio value over 90 days.

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

The Gabelli Value  vs.  Putnam Convertible Incm Gwth

Gabelli Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, The Gabelli 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

Very Weak

Over the last 90 days Putnam Convertible Incm Gwth has generated negative risk-adjusted returns adding no value to fund investors. 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 The Gabelli and Putnam Convertible

The main advantage of trading using opposite The Gabelli and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gabelli 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 The Gabelli Value 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.