Correlation Between Putnam Convertible and Alger Small
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Alger Small 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 Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Convertible Securities and Alger Small Cap, you can compare the effects of market volatilities on Putnam Convertible and Alger Small 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 Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Alger Small.
Diversification Opportunities for Putnam Convertible and Alger Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Alger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap 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 Securities are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Alger Small go up and down completely randomly.
Pair Corralation between Putnam Convertible and Alger Small
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.85 times less return on investment than Alger Small. But when comparing it to its historical volatility, Putnam Convertible Securities is 2.25 times less risky than Alger Small. It trades about 0.13 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,670 in Alger Small Cap on March 29, 2025 and sell it today you would earn a total of 247.00 from holding Alger Small Cap or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Securities vs. Alger Small Cap
Performance |
| Timeline |
| Putnam Convertible |
| Alger Small Cap |
Putnam Convertible and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Alger Small
The main advantage of trading using opposite Putnam Convertible and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Alger Small 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 Alger Small will offset losses from the drop in Alger Small's long position.The idea behind Putnam Convertible Securities and Alger Small Cap 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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