Correlation Between Putnam Money and Multisector Bond

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

By analyzing existing cross correlation between Putnam Money Market and Multisector Bond Sma, you can compare the effects of market volatilities on Putnam Money and Multisector Bond 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 Money with a short position of Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Money and Multisector Bond.

Diversification Opportunities for Putnam Money and Multisector Bond

0.0

Correlation Coefficient

Putnam Money  Multisector Bond

Pay attention - limited upside

The 3 months correlation between Putnam and Multisector is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Money Market and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma and Putnam Money 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 Money Market are associated (or correlated) with Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Putnam Money i.e., Putnam Money and Multisector Bond go up and down completely randomly.

Pair Corralation between Putnam Money and Multisector Bond

If you would invest  100.00  in Putnam Money Market on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Putnam Money Market or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Putnam Money Market  vs.  Multisector Bond Sma

Putnam Money Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Multisector Bond Sma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multisector Bond Sma has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Multisector Bond 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 Money and Multisector Bond

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

The idea behind Putnam Money Market and Multisector Bond Sma 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.