Correlation Between Putnam Retirement and Fidelity Convertible
Can any of the company-specific risk be diversified away by investing in both Putnam Retirement and Fidelity 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 Putnam Retirement and Fidelity Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Retirement Advantage and Fidelity Vertible Securities, you can compare the effects of market volatilities on Putnam Retirement and Fidelity 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 Putnam Retirement with a short position of Fidelity Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Retirement and Fidelity Convertible.
Diversification Opportunities for Putnam Retirement and Fidelity Convertible
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Retirement Advantage and Fidelity Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Convertible and Putnam Retirement 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 Putnam Retirement Advantage are associated (or correlated) with Fidelity Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Convertible has no effect on the direction of Putnam Retirement i.e., Putnam Retirement and Fidelity Convertible go up and down completely randomly.
Pair Corralation between Putnam Retirement and Fidelity Convertible
Assuming the 90 days horizon Putnam Retirement is expected to generate 3.26 times less return on investment than Fidelity Convertible. In addition to that, Putnam Retirement is 1.18 times more volatile than Fidelity Vertible Securities. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Vertible Securities is currently generating about 0.15 per unit of volatility. If you would invest 3,482 in Fidelity Vertible Securities on October 26, 2024 and sell it today you would earn a total of 76.00 from holding Fidelity Vertible Securities or generate 2.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 94.74% |
Values | Daily Returns |
Putnam Retirement Advantage vs. Fidelity Vertible Securities
Performance |
Timeline |
Putnam Retirement |
Fidelity Convertible |
Putnam Retirement and Fidelity Convertible Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Retirement and Fidelity Convertible
The main advantage of trading using opposite Putnam Retirement and Fidelity Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Retirement position performs unexpectedly, Fidelity 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 Fidelity Convertible will offset losses from the drop in Fidelity Convertible's long position.Putnam Retirement vs. Putnam Multi Cap Growth | ||
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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