Correlation Between Putnam Convertible and Great-west Core

Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Great-west Core 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 Great-west Core 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 Great West E Bond, you can compare the effects of market volatilities on Putnam Convertible and Great-west Core 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 Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Great-west Core.

Diversification Opportunities for Putnam Convertible and Great-west Core

-0.71

Correlation Coefficient

Putnam Convertible  Great-west Core

Pay attention - limited upside

The 3 months correlation between Putnam and Great-west is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Incm Gwth and Great West E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core 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 Great-west Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Core has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Great-west Core go up and down completely randomly.

Pair Corralation between Putnam Convertible and Great-west Core

Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to generate 1.58 times more return on investment than Great-west Core. However, Putnam Convertible is 1.58 times more volatile than Great West E Bond. It trades about 0.46 of its potential returns per unit of risk. Great West E Bond is currently generating about 0.11 per unit of risk. If you would invest  2,478  in Putnam Convertible Incm Gwth on September 5, 2024 and sell it today you would earn a total of  137.00  from holding Putnam Convertible Incm Gwth or generate 5.53% return on investment over 90 days.

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

Putnam Convertible Incm Gwth  vs.  Great West E Bond

Putnam Convertible Incm

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Putnam Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Great-west Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West E Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Great-west Core is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam Convertible and Great-west Core

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

The idea behind Putnam Convertible Incm Gwth and Great West E Bond 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.