Correlation Between Putnam Tax and Virtus Real

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

Diversification Opportunities for Putnam Tax and Virtus Real

0.18

Correlation Coefficient

Putnam Tax  Virtus Real

Average diversification

The 3 months correlation between Putnam and Virtus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Tax Exempt and Virtus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Real Estate 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 Virtus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Real Estate has no effect on the direction of Putnam Tax i.e., Putnam Tax and Virtus Real go up and down completely randomly.

Pair Corralation between Putnam Tax and Virtus Real

Assuming the 90 days horizon Putnam Tax is expected to generate 2.42 times less return on investment than Virtus Real. But when comparing it to its historical volatility, Putnam Tax Exempt is 4.16 times less risky than Virtus Real. It trades about 0.03 of its potential returns per unit of risk. Virtus Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,718  in Virtus Real Estate on October 10, 2024 and sell it today you would earn a total of  128.00  from holding Virtus Real Estate or generate 7.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Putnam Tax Exempt  vs.  Virtus Real Estate

Putnam Tax Exempt

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Putnam Tax and Virtus Real

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

The idea behind Putnam Tax Exempt and Virtus Real Estate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.