Correlation Between Putnam Convertible and State Street
Can any of the company-specific risk be diversified away by investing in both Putnam Convertible and State Street 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 State Street 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 State Street Premier, you can compare the effects of market volatilities on Putnam Convertible and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Convertible and State Street.
Diversification Opportunities for Putnam Convertible and State Street
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and State is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Convertible Securities and State Street Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Premier 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Premier has no effect on the direction of Putnam Convertible i.e., Putnam Convertible and State Street go up and down completely randomly.
Pair Corralation between Putnam Convertible and State Street
Assuming the 90 days horizon Putnam Convertible is expected to generate 1.91 times less return on investment than State Street. But when comparing it to its historical volatility, Putnam Convertible Securities is 1.66 times less risky than State Street. It trades about 0.18 of its potential returns per unit of risk. State Street Premier is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 11,757 in State Street Premier on June 4, 2025 and sell it today you would earn a total of 1,241 from holding State Street Premier or generate 10.56% 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. State Street Premier
Performance |
| Timeline |
| Putnam Convertible |
| State Street Premier |
Putnam Convertible and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Convertible and State Street
The main advantage of trading using opposite Putnam Convertible and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Convertible position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Putnam Convertible vs. Ab Global Risk | Putnam Convertible vs. Gmo High Yield | Putnam Convertible vs. Ironclad Managed Risk | Putnam Convertible vs. Barings High Yield |
| State Street vs. Massmutual Premier Diversified | State Street vs. T Rowe Price | State Street vs. Bbh Intermediate Municipal | State Street vs. Multisector Bond Sma |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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