Correlation Between BlackRock TCP and Putnam Managed

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

By analyzing existing cross correlation between BlackRock TCP Capital and Putnam Managed Municipal, you can compare the effects of market volatilities on BlackRock TCP and Putnam Managed 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 BlackRock TCP with a short position of Putnam Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock TCP and Putnam Managed.

Diversification Opportunities for BlackRock TCP and Putnam Managed

-0.19

Correlation Coefficient

BlackRock TCP  Putnam Managed

Good diversification

The 3 months correlation between BlackRock and Putnam is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital and Putnam Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Managed Municipal and BlackRock TCP 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 BlackRock TCP Capital are associated (or correlated) with Putnam Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Managed Municipal has no effect on the direction of BlackRock TCP i.e., BlackRock TCP and Putnam Managed go up and down completely randomly.

Pair Corralation between BlackRock TCP and Putnam Managed

Given the investment horizon of 90 days BlackRock TCP Capital is expected to generate 1.26 times more return on investment than Putnam Managed. However, BlackRock TCP is 1.26 times more volatile than Putnam Managed Municipal. It trades about 0.36 of its potential returns per unit of risk. Putnam Managed Municipal is currently generating about 0.07 per unit of risk. If you would invest  878.00  in BlackRock TCP Capital on September 15, 2024 and sell it today you would earn a total of  73.00  from holding BlackRock TCP Capital or generate 8.31% return on investment over 90 days.

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

BlackRock TCP Capital  vs.  Putnam Managed Municipal

BlackRock TCP Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BlackRock TCP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Putnam Managed Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Managed Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Putnam Managed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock TCP and Putnam Managed

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

The idea behind BlackRock TCP Capital and Putnam Managed Municipal 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.