Correlation Between Putnam Convertible and Alphacentric Lifesci

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

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

Diversification Opportunities for Putnam Convertible and Alphacentric Lifesci

-0.44

Correlation Coefficient

Putnam Convertible  Alphacentric Lifesci

Very good diversification

The 3 months correlation between Putnam and Alphacentric is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Alphacentric Lifesci Healthcar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Lifesci and Putnam Convertible 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 Convertible Incm Gwth are associated (or correlated) with Alphacentric Lifesci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Lifesci has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Alphacentric Lifesci go up and down completely randomly.

Pair Corralation between Putnam Convertible and Alphacentric Lifesci

Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 0.58 times more return on investment than Alphacentric Lifesci. However, Putnam Convertible Incm Gwth is 1.73 times less risky than Alphacentric Lifesci. It trades about 0.22 of its potential returns per unit of risk. Alphacentric Lifesci Healthcare is currently generating about -0.16 per unit of risk. If you would invest  2,415  in Putnam Convertible Incm Gwth on September 16, 2024 and sell it today you would earn a total of  174.00  from holding Putnam Convertible Incm Gwth or generate 7.2% return on investment over 90 days.

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

Putnam Convertible Incm Gwth  vs.  Alphacentric Lifesci Healthcar

Putnam Convertible Incm

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 17 (%) 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.

Alphacentric Lifesci

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphacentric Lifesci Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Putnam Convertible and Alphacentric Lifesci

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

The idea behind Putnam Convertible Incm Gwth and Alphacentric Lifesci Healthcare 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.