Correlation Between Fidelity Series and Putnam Convertible

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

By analyzing existing cross correlation between Fidelity Series Government and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Fidelity Series and Putnam Convertible 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 Fidelity Series with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Putnam Convertible.

Diversification Opportunities for Fidelity Series and Putnam Convertible

-0.75

Correlation Coefficient

Fidelity Series  Putnam Convertible

Pay attention - limited upside

The 3 months correlation between Fidelity and Putnam is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Government and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and Fidelity Series 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 Fidelity Series Government are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Fidelity Series i.e., Fidelity Series and Putnam Convertible go up and down completely randomly.

Pair Corralation between Fidelity Series and Putnam Convertible

Assuming the 90 days horizon Fidelity Series Government is expected to under-perform the Putnam Convertible. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Series Government is 1.54 times less risky than Putnam Convertible. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Putnam Convertible Incm Gwth is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,371  in Putnam Convertible Incm Gwth on September 4, 2024 and sell it today you would earn a total of  246.00  from holding Putnam Convertible Incm Gwth or generate 10.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Fidelity Series Government  vs.  Putnam Convertible Incm Gwth

Fidelity Series Gove

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Convertible Incm

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Putnam Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Series and Putnam Convertible

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

The idea behind Fidelity Series Government and Putnam Convertible Incm Gwth 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.