Correlation Between Alphacentric Hedged and Putnam Floating

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

By analyzing existing cross correlation between Alphacentric Hedged Market and Putnam Floating Rate, you can compare the effects of market volatilities on Alphacentric Hedged and Putnam Floating 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 Alphacentric Hedged with a short position of Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Hedged and Putnam Floating.

Diversification Opportunities for Alphacentric Hedged and Putnam Floating

0.47

Correlation Coefficient

Alphacentric Hedged  Putnam Floating

Very weak diversification

The 3 months correlation between Alphacentric and Putnam is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate and Alphacentric Hedged 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 Alphacentric Hedged Market are associated (or correlated) with Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Putnam Floating go up and down completely randomly.

Pair Corralation between Alphacentric Hedged and Putnam Floating

Assuming the 90 days horizon Alphacentric Hedged Market is expected to generate 5.55 times more return on investment than Putnam Floating. However, Alphacentric Hedged is 5.55 times more volatile than Putnam Floating Rate. It trades about 0.07 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.32 per unit of risk. If you would invest  2,829  in Alphacentric Hedged Market on October 24, 2024 and sell it today you would earn a total of  24.00  from holding Alphacentric Hedged Market or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Alphacentric Hedged Market  vs.  Putnam Floating Rate

Alphacentric Hedged

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphacentric Hedged Market are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alphacentric Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Floating Rate

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphacentric Hedged and Putnam Floating

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

The idea behind Alphacentric Hedged Market and Putnam Floating Rate 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.