Correlation Between Putnam Tax and Cutler Equity
Can any of the company-specific risk be diversified away by investing in both Putnam Tax and Cutler Equity 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 Tax and Cutler Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Tax Exempt and Cutler Equity, you can compare the effects of market volatilities on Putnam Tax and Cutler Equity 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 Tax with a short position of Cutler Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Tax and Cutler Equity.
Diversification Opportunities for Putnam Tax and Cutler Equity
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Cutler is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity and Putnam Tax 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 Tax Exempt are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of Putnam Tax i.e., Putnam Tax and Cutler Equity go up and down completely randomly.
Pair Corralation between Putnam Tax and Cutler Equity
Assuming the 90 days horizon Putnam Tax is expected to generate 5.05 times less return on investment than Cutler Equity. But when comparing it to its historical volatility, Putnam Tax Exempt is 2.9 times less risky than Cutler Equity. It trades about 0.02 of its potential returns per unit of risk. Cutler Equity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,453 in Cutler Equity on October 6, 2024 and sell it today you would earn a total of 175.00 from holding Cutler Equity or generate 7.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.6% |
Values | Daily Returns |
Putnam Tax Exempt vs. Cutler Equity
Performance |
Timeline |
Putnam Tax Exempt |
Cutler Equity |
Putnam Tax and Cutler Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Tax and Cutler Equity
The main advantage of trading using opposite Putnam Tax and Cutler Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Tax position performs unexpectedly, Cutler Equity 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 Cutler Equity will offset losses from the drop in Cutler Equity's long position.Putnam Tax vs. Putnam Equity Income | Putnam Tax vs. Putnam Tax Exempt | Putnam Tax vs. Putnam Floating Rate | Putnam Tax vs. Putnam High Yield |
Cutler Equity vs. Upright Growth Income | Cutler Equity vs. Eip Growth And | Cutler Equity vs. Franklin Growth Opportunities | Cutler Equity vs. Praxis Growth Index |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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