Correlation Between Sixth Street and Putnam Managed

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

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

Diversification Opportunities for Sixth Street and Putnam Managed

0.23

Correlation Coefficient

Sixth Street  Putnam Managed

Modest diversification

The 3 months correlation between Sixth and Putnam is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty 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 Sixth Street 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 Sixth Street Specialty 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 Sixth Street i.e., Sixth Street and Putnam Managed go up and down completely randomly.

Pair Corralation between Sixth Street and Putnam Managed

Given the investment horizon of 90 days Sixth Street Specialty is expected to generate 0.66 times more return on investment than Putnam Managed. However, Sixth Street Specialty is 1.51 times less risky than Putnam Managed. It trades about 0.48 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  2,021  in Sixth Street Specialty on September 15, 2024 and sell it today you would earn a total of  116.00  from holding Sixth Street Specialty or generate 5.74% return on investment over 90 days.

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

Sixth Street Specialty  vs.  Putnam Managed Municipal

Sixth Street Specialty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sixth Street Specialty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Sixth Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Sixth Street and Putnam Managed

The main advantage of trading using opposite Sixth Street and Putnam Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth Street 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 Sixth Street Specialty 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.