Correlation Between Putnam Floating and Lord Abbett

Can any of the company-specific risk be diversified away by investing in both Putnam Floating and Lord Abbett 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 Lord Abbett 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 Lord Abbett High, you can compare the effects of market volatilities on Putnam Floating and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Floating and Lord Abbett.

Diversification Opportunities for Putnam Floating and Lord Abbett

0.11

Correlation Coefficient

Putnam Floating  Lord Abbett

Average diversification

The 3 months correlation between Putnam and Lord is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Floating Rate and Lord Abbett High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett High 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett High has no effect on the direction of Putnam Floating i.e., Putnam Floating and Lord Abbett go up and down completely randomly.

Pair Corralation between Putnam Floating and Lord Abbett

Assuming the 90 days horizon Putnam Floating Rate is expected to generate 0.61 times more return on investment than Lord Abbett. However, Putnam Floating Rate is 1.65 times less risky than Lord Abbett. It trades about 0.21 of its potential returns per unit of risk. Lord Abbett High is currently generating about 0.1 per unit of risk. If you would invest  773.00  in Putnam Floating Rate on September 15, 2024 and sell it today you would earn a total of  28.00  from holding Putnam Floating Rate or generate 3.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Putnam Floating Rate  vs.  Lord Abbett High

Putnam Floating Rate

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Putnam Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lord Abbett 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 Lord Abbett

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

The idea behind Putnam Floating Rate and Lord Abbett High 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.