Correlation Between Putnam Convertible and Thrivent Government

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

Diversification Opportunities for Putnam Convertible and Thrivent Government

0.28

Correlation Coefficient

Putnam Convertible  Thrivent Government

Modest diversification

The 3 months correlation between Putnam and Thrivent is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Thrivent Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Government Bond 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 Thrivent Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Government Bond has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Thrivent Government go up and down completely randomly.

Pair Corralation between Putnam Convertible and Thrivent Government

Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to under-perform the Thrivent Government. In addition to that, Putnam Convertible is 2.26 times more volatile than Thrivent Government Bond. It trades about -0.01 of its total potential returns per unit of risk. Thrivent Government Bond is currently generating about 0.17 per unit of volatility. If you would invest  863.00  in Thrivent Government Bond on November 30, 2024 and sell it today you would earn a total of  18.00  from holding Thrivent Government Bond or generate 2.09% 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.  Thrivent Government Bond

Putnam Convertible Incm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Convertible Incm Gwth has generated negative risk-adjusted returns adding no value to fund investors. 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.

Thrivent Government Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Government Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thrivent Government 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 Thrivent Government

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

The idea behind Putnam Convertible Incm Gwth and Thrivent Government Bond 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.