Correlation Between Matisse Discounted and Putnam Retirement

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

By analyzing existing cross correlation between Matisse Discounted Closed End and Putnam Retirement Advantage, you can compare the effects of market volatilities on Matisse Discounted and Putnam Retirement 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 Matisse Discounted with a short position of Putnam Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matisse Discounted and Putnam Retirement.

Diversification Opportunities for Matisse Discounted and Putnam Retirement

0.61

Correlation Coefficient

Matisse Discounted  Putnam Retirement

Poor diversification

The 3 months correlation between MATISSE and Putnam is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Matisse Discounted Closed End and Putnam Retirement Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Retirement and Matisse Discounted 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 Matisse Discounted Closed End are associated (or correlated) with Putnam Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Retirement has no effect on the direction of Matisse Discounted i.e., Matisse Discounted and Putnam Retirement go up and down completely randomly.

Pair Corralation between Matisse Discounted and Putnam Retirement

Assuming the 90 days horizon Matisse Discounted Closed End is expected to generate 1.0 times more return on investment than Putnam Retirement. However, Matisse Discounted Closed End is 1.0 times less risky than Putnam Retirement. It trades about -0.02 of its potential returns per unit of risk. Putnam Retirement Advantage is currently generating about -0.06 per unit of risk. If you would invest  705.00  in Matisse Discounted Closed End on December 21, 2024 and sell it today you would lose (10.00) from holding Matisse Discounted Closed End or give up 1.42% of portfolio value over 90 days.

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

Matisse Discounted Closed End  vs.  Putnam Retirement Advantage

Matisse Discounted

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matisse Discounted Closed End has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Matisse Discounted is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Retirement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Retirement Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Putnam Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matisse Discounted and Putnam Retirement

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

The idea behind Matisse Discounted Closed End and Putnam Retirement Advantage 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.