Correlation Between Putnam Convertible and Nuveen Santa

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

Diversification Opportunities for Putnam Convertible and Nuveen Santa

0.33

Correlation Coefficient

Putnam Convertible  Nuveen Santa

Weak diversification

The 3 months correlation between Putnam and Nuveen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Nuveen Santa Barbara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Santa Barbara 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 Nuveen Santa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Santa Barbara has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Nuveen Santa go up and down completely randomly.

Pair Corralation between Putnam Convertible and Nuveen Santa

Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 0.65 times more return on investment than Nuveen Santa. However, Putnam Convertible Incm Gwth is 1.54 times less risky than Nuveen Santa. It trades about 0.05 of its potential returns per unit of risk. Nuveen Santa Barbara is currently generating about -0.09 per unit of risk. If you would invest  2,464  in Putnam Convertible Incm Gwth on October 5, 2024 and sell it today you would earn a total of  46.00  from holding Putnam Convertible Incm Gwth or generate 1.87% 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.  Nuveen Santa Barbara

Putnam Convertible Incm

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Putnam Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Santa Barbara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Santa Barbara has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Nuveen Santa 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 Convertible and Nuveen Santa

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

The idea behind Putnam Convertible Incm Gwth and Nuveen Santa Barbara 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.