Correlation Between Putnam Convertible and Mid-cap Value
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Mid-cap 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 Mid-cap 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 Mid Cap Value Profund, you can compare the effects of market volatilities on Putnam Convertible and Mid-cap 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 Mid-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Mid-cap Value.
Diversification Opportunities for Putnam Convertible and Mid-cap Value
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Mid-cap is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Vertible Securities and Mid Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value 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 Mid-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Mid-cap Value go up and down completely randomly.
Pair Corralation between Putnam Convertible and Mid-cap Value
Assuming the 90 days horizon Putnam Vertible Securities is expected to generate 0.75 times more return on investment than Mid-cap Value. However, Putnam Vertible Securities is 1.33 times less risky than Mid-cap Value. It trades about -0.03 of its potential returns per unit of risk. Mid Cap Value Profund is currently generating about -0.09 per unit of risk. If you would invest 2,670 in Putnam Vertible Securities on October 31, 2024 and sell it today you would lose (26.00) from holding Putnam Vertible Securities or give up 0.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 97.44% |
Values | Daily Returns |
Putnam Vertible Securities vs. Mid Cap Value Profund
Performance |
Timeline |
Putnam Vertible Secu |
Mid Cap Value |
Putnam Convertible and Mid-cap Value Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Convertible and Mid-cap Value
The main advantage of trading using opposite Putnam Convertible and Mid-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Mid-cap 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 Mid-cap Value will offset losses from the drop in Mid-cap Value's long position.Putnam Convertible vs. Blackrock Financial Institutions | ||
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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