Correlation Between Putnman Retirement and Us Government

Can any of the company-specific risk be diversified away by investing in both Putnman Retirement and Us 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 Putnman Retirement and Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putnman Retirement Ready and Us Government Plus, you can compare the effects of market volatilities on Putnman Retirement and Us 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 Putnman Retirement with a short position of Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnman Retirement and Us Government.

Diversification Opportunities for Putnman Retirement and Us Government

0.68

Correlation Coefficient

Putnman Retirement  Us Government

Poor diversification

The 3 months correlation between Putnman and GVPIX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Putnman Retirement Ready and Us Government Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Plus and Putnman Retirement 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 Putnman Retirement Ready are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Plus has no effect on the direction of Putnman Retirement i.e., Putnman Retirement and Us Government go up and down completely randomly.

Pair Corralation between Putnman Retirement and Us Government

Assuming the 90 days horizon Putnman Retirement is expected to generate 9.74 times less return on investment than Us Government. But when comparing it to its historical volatility, Putnman Retirement Ready is 2.53 times less risky than Us Government. It trades about 0.04 of its potential returns per unit of risk. Us Government Plus is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,222  in Us Government Plus on December 5, 2024 and sell it today you would earn a total of  209.00  from holding Us Government Plus or generate 6.49% return on investment over 90 days.

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

Putnman Retirement Ready  vs.  Us Government Plus

Putnman Retirement Ready

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnman Retirement Ready has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnman Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Government Plus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Government Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Us 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 Putnman Retirement and Us Government

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

The idea behind Putnman Retirement Ready and Us Government Plus 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.