Correlation Between Putnam Convertible and Great-west
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Great-west 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 Great-west 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 Great West Government Mortgage, you can compare the effects of market volatilities on Putnam Convertible and Great-west 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 Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Great-west.
Diversification Opportunities for Putnam Convertible and Great-west
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and Great-west is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Vertible Securities and Great West Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Government 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 Great-west. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Government has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Great-west go up and down completely randomly.
Pair Corralation between Putnam Convertible and Great-west
Assuming the 90 days horizon Putnam Vertible Securities is expected to under-perform the Great-west. In addition to that, Putnam Convertible is 1.53 times more volatile than Great West Government Mortgage. It trades about -0.07 of its total potential returns per unit of risk. Great West Government Mortgage is currently generating about 0.1 per unit of volatility. If you would invest 1,069 in Great West Government Mortgage on December 22, 2024 and sell it today you would earn a total of 32.00 from holding Great West Government Mortgage or generate 2.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Putnam Vertible Securities vs. Great West Government Mortgage
Performance |
Timeline |
Putnam Vertible Secu |
Great West Government |
Putnam Convertible and Great-west Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Convertible and Great-west
The main advantage of trading using opposite Putnam Convertible and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Great-west 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 Great-west will offset losses from the drop in Great-west's long position.The idea behind Putnam Vertible Securities and Great West Government Mortgage 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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