Correlation Between Pimco Rae and Putnam Convertible

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

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

Diversification Opportunities for Pimco Rae and Putnam Convertible

-0.45

Correlation Coefficient

Pimco Rae  Putnam Convertible

Very good diversification

The 3 months correlation between Pimco and Putnam is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and Pimco Rae 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 Pimco Rae Worldwide are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Pimco Rae i.e., Pimco Rae and Putnam Convertible go up and down completely randomly.

Pair Corralation between Pimco Rae and Putnam Convertible

Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 0.73 times more return on investment than Putnam Convertible. However, Pimco Rae Worldwide is 1.36 times less risky than Putnam Convertible. It trades about 0.22 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about -0.06 per unit of risk. If you would invest  742.00  in Pimco Rae Worldwide on December 28, 2024 and sell it today you would earn a total of  59.00  from holding Pimco Rae Worldwide or generate 7.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pimco Rae Worldwide  vs.  Putnam Convertible Incm Gwth

Pimco Rae Worldwide

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Pimco Rae may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Pimco Rae and Putnam Convertible

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

The idea behind Pimco Rae Worldwide and Putnam Convertible Incm Gwth 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.