Correlation Between Putnam Floating and Putnam Retirement

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

By analyzing existing cross correlation between Putnam Floating Rate and Putnam Retirement Income, you can compare the effects of market volatilities on Putnam Floating and Putnam Retirement 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 Putnam Floating with a short position of Putnam Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Floating and Putnam Retirement.

Diversification Opportunities for Putnam Floating and Putnam Retirement

-0.23

Correlation Coefficient

Putnam Floating  Putnam Retirement

Very good diversification

The 3 months correlation between Putnam and Putnam is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Floating Rate and Putnam Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Retirement Income and Putnam Floating 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 Putnam Floating Rate are associated (or correlated) with Putnam Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Retirement Income has no effect on the direction of Putnam Floating i.e., Putnam Floating and Putnam Retirement go up and down completely randomly.

Pair Corralation between Putnam Floating and Putnam Retirement

Assuming the 90 days horizon Putnam Floating Rate is expected to generate 0.37 times more return on investment than Putnam Retirement. However, Putnam Floating Rate is 2.7 times less risky than Putnam Retirement. It trades about 0.2 of its potential returns per unit of risk. Putnam Retirement Income is currently generating about -0.09 per unit of risk. If you would invest  787.00  in Putnam Floating Rate on September 25, 2024 and sell it today you would earn a total of  12.00  from holding Putnam Floating Rate or generate 1.52% return on investment over 90 days.

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

Putnam Floating Rate  vs.  Putnam Retirement Income

Putnam Floating Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Putnam Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Retirement Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Putnam Floating and Putnam Retirement

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

The idea behind Putnam Floating Rate and Putnam Retirement Income 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.