Correlation Between Putnam Convertible and Natixis Sustainable

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

By analyzing existing cross correlation between Putnam Convertible Securities and Natixis Sustainable Future, you can compare the effects of market volatilities on Putnam Convertible and Natixis Sustainable 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 Natixis Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Natixis Sustainable.

Diversification Opportunities for Putnam Convertible and Natixis Sustainable

0.62

Correlation Coefficient

Putnam Convertible  Natixis Sustainable

Poor diversification

The 3 months correlation between Putnam and Natixis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Natixis Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Sustainable 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 Convertible Securities are associated (or correlated) with Natixis Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Sustainable has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Natixis Sustainable go up and down completely randomly.

Pair Corralation between Putnam Convertible and Natixis Sustainable

Assuming the 90 days horizon Putnam Convertible Securities is expected to under-perform the Natixis Sustainable. In addition to that, Putnam Convertible is 1.96 times more volatile than Natixis Sustainable Future. It trades about -0.37 of its total potential returns per unit of risk. Natixis Sustainable Future is currently generating about -0.14 per unit of volatility. If you would invest  1,087  in Natixis Sustainable Future on December 8, 2024 and sell it today you would lose (15.00) from holding Natixis Sustainable Future or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Putnam Convertible Securities  vs.  Natixis Sustainable Future

Putnam Convertible

Risk-Adjusted Performance

Very Weak

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

Natixis Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natixis Sustainable Future has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Natixis Sustainable 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 Natixis Sustainable

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

The idea behind Putnam Convertible Securities and Natixis Sustainable Future 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.