Correlation Between Sp Midcap and Putnam Pennsylvania

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

By analyzing existing cross correlation between Sp Midcap Index and Putnam Pennsylvania Tax, you can compare the effects of market volatilities on Sp Midcap and Putnam Pennsylvania 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 Sp Midcap with a short position of Putnam Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Putnam Pennsylvania.

Diversification Opportunities for Sp Midcap and Putnam Pennsylvania

0.25

Correlation Coefficient

Sp Midcap  Putnam Pennsylvania

Modest diversification

The 3 months correlation between SPMIX and Putnam is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Putnam Pennsylvania Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Pennsylvania Tax and Sp Midcap 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 Sp Midcap Index are associated (or correlated) with Putnam Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Pennsylvania Tax has no effect on the direction of Sp Midcap i.e., Sp Midcap and Putnam Pennsylvania go up and down completely randomly.

Pair Corralation between Sp Midcap and Putnam Pennsylvania

Assuming the 90 days horizon Sp Midcap Index is expected to under-perform the Putnam Pennsylvania. In addition to that, Sp Midcap is 3.94 times more volatile than Putnam Pennsylvania Tax. It trades about -0.25 of its total potential returns per unit of risk. Putnam Pennsylvania Tax is currently generating about -0.45 per unit of volatility. If you would invest  878.00  in Putnam Pennsylvania Tax on October 10, 2024 and sell it today you would lose (21.00) from holding Putnam Pennsylvania Tax or give up 2.39% of portfolio value over 90 days.

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

Sp Midcap Index  vs.  Putnam Pennsylvania Tax

Sp Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Pennsylvania Tax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sp Midcap and Putnam Pennsylvania

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

The idea behind Sp Midcap Index and Putnam Pennsylvania 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.