Correlation Between Putnam Convertible and Frank Value

Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Frank Value 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 Frank Value 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 Frank Value Fund, you can compare the effects of market volatilities on Putnam Convertible and Frank Value 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 Frank Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Frank Value.

Diversification Opportunities for Putnam Convertible and Frank Value

0.82

Correlation Coefficient

Putnam Convertible  Frank Value

Very poor diversification

The 3 months correlation between Putnam and Frank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Vertible Securities and Frank Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frank Value Fund 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 Frank Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frank Value Fund has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Frank Value go up and down completely randomly.

Pair Corralation between Putnam Convertible and Frank Value

Assuming the 90 days horizon Putnam Vertible Securities is expected to generate 0.62 times more return on investment than Frank Value. However, Putnam Vertible Securities is 1.62 times less risky than Frank Value. It trades about 0.08 of its potential returns per unit of risk. Frank Value Fund is currently generating about 0.04 per unit of risk. If you would invest  2,151  in Putnam Vertible Securities on October 26, 2024 and sell it today you would earn a total of  502.00  from holding Putnam Vertible Securities or generate 23.34% return on investment over 90 days.

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

Putnam Vertible Securities  vs.  Frank Value Fund

Putnam Vertible Secu

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Vertible Securities are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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.

Frank Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Putnam Convertible and Frank Value

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

The idea behind Putnam Vertible Securities and Frank Value 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..