Correlation Between Putnam Convertible and Eventide Gilead

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

By analyzing existing cross correlation between Putnam Vertible Securities and Eventide Gilead Fund, you can compare the effects of market volatilities on Putnam Convertible and Eventide Gilead 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 Convertible with a short position of Eventide Gilead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Eventide Gilead.

Diversification Opportunities for Putnam Convertible and Eventide Gilead

0.98

Correlation Coefficient

Putnam Convertible  Eventide Gilead

Almost no diversification

The 3 months correlation between Putnam and Eventide is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Vertible Securities and Eventide Gilead Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Gilead and Putnam Convertible 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 Vertible Securities are associated (or correlated) with Eventide Gilead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Gilead has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Eventide Gilead go up and down completely randomly.

Pair Corralation between Putnam Convertible and Eventide Gilead

Assuming the 90 days horizon Putnam Vertible Securities is expected to generate 0.52 times more return on investment than Eventide Gilead. However, Putnam Vertible Securities is 1.93 times less risky than Eventide Gilead. It trades about -0.08 of its potential returns per unit of risk. Eventide Gilead Fund is currently generating about -0.07 per unit of risk. If you would invest  2,584  in Putnam Vertible Securities on December 21, 2024 and sell it today you would lose (97.00) from holding Putnam Vertible Securities or give up 3.75% of portfolio value over 90 days.

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

Putnam Vertible Securities  vs.  Eventide Gilead Fund

Putnam Vertible Secu

Risk-Adjusted Performance

Very Weak

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

Eventide Gilead

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eventide Gilead Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Putnam Convertible and Eventide Gilead

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

The idea behind Putnam Vertible Securities and Eventide Gilead Fund 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.