Correlation Between Pacific Capital and Putnam Floating

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

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

Diversification Opportunities for Pacific Capital and Putnam Floating

-0.43

Correlation Coefficient

Pacific Capital  Putnam Floating

Very good diversification

The 3 months correlation between Pacific and Putnam is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Capital Tax Free and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate and Pacific Capital 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 Pacific Capital Tax Free are associated (or correlated) with Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Pacific Capital i.e., Pacific Capital and Putnam Floating go up and down completely randomly.

Pair Corralation between Pacific Capital and Putnam Floating

Assuming the 90 days horizon Pacific Capital is expected to generate 260.0 times less return on investment than Putnam Floating. In addition to that, Pacific Capital is 1.48 times more volatile than Putnam Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.26 per unit of volatility. If you would invest  788.00  in Putnam Floating Rate on September 13, 2024 and sell it today you would earn a total of  13.00  from holding Putnam Floating Rate or generate 1.65% return on investment over 90 days.

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

Pacific Capital Tax Free  vs.  Putnam Floating Rate

Pacific Capital Tax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Floating Rate

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Floating Rate are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Putnam Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacific Capital and Putnam Floating

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

The idea behind Pacific Capital Tax Free and Putnam Floating Rate 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.