Correlation Between Putnam Floating and Cf Tips

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

Diversification Opportunities for Putnam Floating and Cf Tips

-0.19

Correlation Coefficient

Putnam Floating  Cf Tips

Good diversification

The 3 months correlation between Putnam and IBTCX is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Floating Rate and Cf Tips Bd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cf Tips Bd 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 Cf Tips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cf Tips Bd has no effect on the direction of Putnam Floating i.e., Putnam Floating and Cf Tips go up and down completely randomly.

Pair Corralation between Putnam Floating and Cf Tips

Assuming the 90 days horizon Putnam Floating Rate is expected to generate 0.51 times more return on investment than Cf Tips. However, Putnam Floating Rate is 1.98 times less risky than Cf Tips. It trades about 0.19 of its potential returns per unit of risk. Cf Tips Bd is currently generating about 0.02 per unit of risk. If you would invest  681.00  in Putnam Floating Rate on October 27, 2024 and sell it today you would earn a total of  120.00  from holding Putnam Floating Rate or generate 17.62% return on investment over 90 days.

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

Putnam Floating Rate  vs.  Cf Tips Bd

Putnam Floating Rate

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 22 (%) 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.

Cf Tips Bd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cf Tips Bd has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Cf Tips 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 Cf Tips

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

The idea behind Putnam Floating Rate and Cf Tips Bd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.