Correlation Between Putnam Convertible and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and Gmo Global 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 Gmo Global 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 Gmo Global Developed, you can compare the effects of market volatilities on Putnam Convertible and Gmo Global 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 Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and Gmo Global.
Diversification Opportunities for Putnam Convertible and Gmo Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Gmo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and Gmo Global Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Developed 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 Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Developed has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and Gmo Global go up and down completely randomly.
Pair Corralation between Putnam Convertible and Gmo Global
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.31 times less return on investment than Gmo Global. But when comparing it to its historical volatility, Putnam Convertible Securities is 1.4 times less risky than Gmo Global. It trades about 0.21 of its potential returns per unit of risk. Gmo Global Developed is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,726 in Gmo Global Developed on June 2, 2025 and sell it today you would earn a total of 231.00 from holding Gmo Global Developed or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Convertible Securities vs. Gmo Global Developed
Performance |
| Timeline |
| Putnam Convertible |
| Gmo Global Developed |
Putnam Convertible and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and Gmo Global
The main advantage of trading using opposite Putnam Convertible and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, Gmo Global 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 Gmo Global will offset losses from the drop in Gmo Global's long position.| Putnam Convertible vs. Putnam Equity Income | Putnam Convertible vs. Putnam Tax Exempt | Putnam Convertible vs. Putnam Floating Rate | Putnam Convertible vs. Putnam High Yield |
| Gmo Global vs. Gmo E Plus | Gmo Global vs. Gmo Trust | Gmo Global vs. Gmo Treasury Fund | Gmo Global vs. Gmo Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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