Correlation Between Putnam Managed and Pioneer Municipal

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

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

Diversification Opportunities for Putnam Managed and Pioneer Municipal

0.67

Correlation Coefficient

Putnam Managed  Pioneer Municipal

Poor diversification

The 3 months correlation between Putnam and Pioneer is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Managed Municipal and Pioneer Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Municipal High and Putnam Managed 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 Managed Municipal are associated (or correlated) with Pioneer Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Municipal High has no effect on the direction of Putnam Managed i.e., Putnam Managed and Pioneer Municipal go up and down completely randomly.

Pair Corralation between Putnam Managed and Pioneer Municipal

Considering the 90-day investment horizon Putnam Managed Municipal is expected to under-perform the Pioneer Municipal. In addition to that, Putnam Managed is 1.06 times more volatile than Pioneer Municipal High. It trades about -0.01 of its total potential returns per unit of risk. Pioneer Municipal High is currently generating about 0.02 per unit of volatility. If you would invest  876.00  in Pioneer Municipal High on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Pioneer Municipal High or generate 0.68% return on investment over 90 days.

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

Putnam Managed Municipal  vs.  Pioneer Municipal High

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.

Pioneer Municipal High

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Municipal High are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Pioneer Municipal is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Putnam Managed and Pioneer Municipal

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

The idea behind Putnam Managed Municipal and Pioneer Municipal High 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.