Correlation Between Putnam Short and Pimco Dynamic

Can any of the company-specific risk be diversified away by investing in both Putnam Short and Pimco Dynamic 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 Short and Pimco Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putnam Short Duration and Pimco Dynamic Income, you can compare the effects of market volatilities on Putnam Short and Pimco Dynamic 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 Short with a short position of Pimco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Short and Pimco Dynamic.

Diversification Opportunities for Putnam Short and Pimco Dynamic

-0.43

Correlation Coefficient

Putnam Short  Pimco Dynamic

Very good diversification

The 3 months correlation between Putnam and Pimco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Short Duration and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Putnam Short 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 Short Duration are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Putnam Short i.e., Putnam Short and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Putnam Short and Pimco Dynamic

Assuming the 90 days horizon Putnam Short is expected to generate 11.39 times less return on investment than Pimco Dynamic. But when comparing it to its historical volatility, Putnam Short Duration is 3.43 times less risky than Pimco Dynamic. It trades about 0.19 of its potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest  1,812  in Pimco Dynamic Income on October 20, 2024 and sell it today you would earn a total of  88.00  from holding Pimco Dynamic Income or generate 4.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Putnam Short Duration  vs.  Pimco Dynamic Income

Putnam Short Duration

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Short Duration are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Dynamic Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Dynamic Income has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Putnam Short and Pimco Dynamic

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

The idea behind Putnam Short Duration and Pimco Dynamic Income 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.