Correlation Between Putnam Floating and Wells Fargo

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

By analyzing existing cross correlation between Putnam Floating Rate and Wells Fargo Funds, you can compare the effects of market volatilities on Putnam Floating and Wells Fargo 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 Floating with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Floating and Wells Fargo.

Diversification Opportunities for Putnam Floating and Wells Fargo

0.62

Correlation Coefficient

Putnam Floating  Wells Fargo

Poor diversification

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

Pair Corralation between Putnam Floating and Wells Fargo

If you would invest  794.00  in Putnam Floating Rate on September 26, 2024 and sell it today you would earn a total of  5.00  from holding Putnam Floating Rate or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Putnam Floating Rate  vs.  Wells Fargo Funds

Putnam Floating Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Putnam Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wells Fargo 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 Floating and Wells Fargo

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

The idea behind Putnam Floating Rate and Wells Fargo Funds 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.