Correlation Between Multisector Bond and Putnam Tax
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Putnam Tax 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 Multisector Bond and Putnam Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Putnam Tax Exempt, you can compare the effects of market volatilities on Multisector Bond and Putnam Tax 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 Multisector Bond with a short position of Putnam Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Putnam Tax.
Diversification Opportunities for Multisector Bond and Putnam Tax
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multisector and Putnam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Putnam Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Tax Exempt and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Putnam Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Tax Exempt has no effect on the direction of Multisector Bond i.e., Multisector Bond and Putnam Tax go up and down completely randomly.
Pair Corralation between Multisector Bond and Putnam Tax
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 0.98 times more return on investment than Putnam Tax. However, Multisector Bond Sma is 1.02 times less risky than Putnam Tax. It trades about 0.09 of its potential returns per unit of risk. Putnam Tax Exempt is currently generating about -0.03 per unit of risk. If you would invest 1,361 in Multisector Bond Sma on December 2, 2024 and sell it today you would earn a total of 19.00 from holding Multisector Bond Sma or generate 1.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Multisector Bond Sma vs. Putnam Tax Exempt
Performance |
Timeline |
Multisector Bond Sma |
Putnam Tax Exempt |
Multisector Bond and Putnam Tax Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Multisector Bond and Putnam Tax
The main advantage of trading using opposite Multisector Bond and Putnam Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Putnam Tax 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 Tax will offset losses from the drop in Putnam Tax's long position.Multisector Bond vs. Columbia Global Technology | Multisector Bond vs. Allianzgi Technology Fund | Multisector Bond vs. Baron Select Funds | Multisector Bond vs. Hennessy Technology Fund |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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