Correlation Between Resq Dynamic and Putnam Convertible

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Resq Dynamic and Putnam Convertible 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 Resq Dynamic and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resq Dynamic Allocation and Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Resq Dynamic and Putnam Convertible 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 Resq Dynamic with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resq Dynamic and Putnam Convertible.

Diversification Opportunities for Resq Dynamic and Putnam Convertible

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Resq and Putnam is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Resq Dynamic Allocation and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm and Resq Dynamic 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 Resq Dynamic Allocation are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Resq Dynamic i.e., Resq Dynamic and Putnam Convertible go up and down completely randomly.

Pair Corralation between Resq Dynamic and Putnam Convertible

Assuming the 90 days horizon Resq Dynamic Allocation is expected to generate 2.65 times more return on investment than Putnam Convertible. However, Resq Dynamic is 2.65 times more volatile than Putnam Convertible Incm Gwth. It trades about 0.19 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.22 per unit of risk. If you would invest  909.00  in Resq Dynamic Allocation on September 16, 2024 and sell it today you would earn a total of  147.00  from holding Resq Dynamic Allocation or generate 16.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Resq Dynamic Allocation  vs.  Putnam Convertible Incm Gwth

 Performance 
       Timeline  
Resq Dynamic Allocation 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Resq Dynamic Allocation are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Resq Dynamic showed solid returns over the last few months and may actually be approaching a breakup point.
Putnam Convertible Incm 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
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.

Resq Dynamic and Putnam Convertible Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Resq Dynamic and Putnam Convertible

The main advantage of trading using opposite Resq Dynamic and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resq Dynamic position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible's long position.
The idea behind Resq Dynamic Allocation and Putnam Convertible Incm Gwth 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.
Check out your portfolio center.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

Other Complementary Tools

Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Stocks Directory
Find actively traded stocks across global markets
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments