Correlation Between Tax-managed and Putnam Minnesota

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

By analyzing existing cross correlation between Tax Managed Large Cap and Putnam Minnesota Tax, you can compare the effects of market volatilities on Tax-managed and Putnam Minnesota 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 Tax-managed with a short position of Putnam Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Putnam Minnesota.

Diversification Opportunities for Tax-managed and Putnam Minnesota

0.59

Correlation Coefficient

Tax-managed  Putnam Minnesota

Very weak diversification

The 3 months correlation between Tax-managed and Putnam is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Large Cap and Putnam Minnesota Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Minnesota Tax and Tax-managed 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 Tax Managed Large Cap are associated (or correlated) with Putnam Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Minnesota Tax has no effect on the direction of Tax-managed i.e., Tax-managed and Putnam Minnesota go up and down completely randomly.

Pair Corralation between Tax-managed and Putnam Minnesota

Assuming the 90 days horizon Tax Managed Large Cap is expected to generate 3.76 times more return on investment than Putnam Minnesota. However, Tax-managed is 3.76 times more volatile than Putnam Minnesota Tax. It trades about 0.07 of its potential returns per unit of risk. Putnam Minnesota Tax is currently generating about 0.05 per unit of risk. If you would invest  8,651  in Tax Managed Large Cap on October 25, 2024 and sell it today you would earn a total of  94.00  from holding Tax Managed Large Cap or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Tax Managed Large Cap  vs.  Putnam Minnesota Tax

Tax Managed Large

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Minnesota Tax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tax-managed and Putnam Minnesota

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

The idea behind Tax Managed Large Cap and Putnam Minnesota Tax 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..