Correlation Between Red Oak and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Red Oak and Putnam Floating 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 Red Oak and Putnam Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Putnam Floating Rate, you can compare the effects of market volatilities on Red Oak and Putnam Floating 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 Red Oak with a short position of Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Putnam Floating.
Diversification Opportunities for Red Oak and Putnam Floating
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Putnam is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate and Red Oak 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 Red Oak Technology are associated (or correlated) with Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Red Oak i.e., Red Oak and Putnam Floating go up and down completely randomly.
Pair Corralation between Red Oak and Putnam Floating
Assuming the 90 days horizon Red Oak Technology is expected to generate 26.5 times more return on investment than Putnam Floating. However, Red Oak is 26.5 times more volatile than Putnam Floating Rate. It trades about 0.07 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.32 per unit of risk. If you would invest 4,943 in Red Oak Technology on September 14, 2024 and sell it today you would earn a total of 69.00 from holding Red Oak Technology or generate 1.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Red Oak Technology vs. Putnam Floating Rate
Performance |
Timeline |
Red Oak Technology |
Putnam Floating Rate |
Red Oak and Putnam Floating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Red Oak and Putnam Floating
The main advantage of trading using opposite Red Oak and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak position performs unexpectedly, Putnam Floating 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 Floating will offset losses from the drop in Putnam Floating's long position.Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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