Correlation Between Putnam Convertible and Direxion Monthly
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Direxion Monthly 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 Direxion Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Convertible Incm Gwth and Direxion Monthly High, you can compare the effects of market volatilities on Putnam Convertible and Direxion Monthly 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 Direxion Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Direxion Monthly.
Diversification Opportunities for Putnam Convertible and Direxion Monthly
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Putnam and Direxion is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Direxion Monthly High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly High 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 Incm Gwth are associated (or correlated) with Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly High has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Direxion Monthly go up and down completely randomly.
Pair Corralation between Putnam Convertible and Direxion Monthly
Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to under-perform the Direxion Monthly. In addition to that, Putnam Convertible is 2.12 times more volatile than Direxion Monthly High. It trades about -0.09 of its total potential returns per unit of risk. Direxion Monthly High is currently generating about 0.07 per unit of volatility. If you would invest 1,753 in Direxion Monthly High on December 2, 2024 and sell it today you would earn a total of 23.00 from holding Direxion Monthly High or generate 1.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Putnam Convertible Incm Gwth vs. Direxion Monthly High
Performance |
Timeline |
Putnam Convertible Incm |
Direxion Monthly High |
Putnam Convertible and Direxion Monthly Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Convertible and Direxion Monthly
The main advantage of trading using opposite Putnam Convertible and Direxion Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Direxion Monthly 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 Direxion Monthly will offset losses from the drop in Direxion Monthly's long position.Putnam Convertible vs. Health Care Fund | Putnam Convertible vs. Alphacentric Lifesci Healthcare | Putnam Convertible vs. Blackrock Health Sciences | Putnam Convertible vs. Schwab Health Care |
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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 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.
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