Correlation Between Putnam Money and Chestnut Street
Can any of the company-specific risk be diversified away by investing in both Putnam Money and Chestnut 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 Money and Chestnut Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Money Market and Chestnut Street Exchange, you can compare the effects of market volatilities on Putnam Money and Chestnut 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 Money with a short position of Chestnut Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Money and Chestnut Street.
Diversification Opportunities for Putnam Money and Chestnut Street
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Putnam and Chestnut is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Money Market and Chestnut Street Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chestnut Street Exchange and Putnam Money 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 Money Market are associated (or correlated) with Chestnut Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chestnut Street Exchange has no effect on the direction of Putnam Money i.e., Putnam Money and Chestnut Street go up and down completely randomly.
Pair Corralation between Putnam Money and Chestnut Street
Assuming the 90 days horizon Putnam Money is expected to generate 2.97 times less return on investment than Chestnut Street. But when comparing it to its historical volatility, Putnam Money Market is 4.62 times less risky than Chestnut Street. It trades about 0.13 of its potential returns per unit of risk. Chestnut Street Exchange is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 103,669 in Chestnut Street Exchange on February 23, 2024 and sell it today you would earn a total of 3,033 from holding Chestnut Street Exchange or generate 2.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Putnam Money Market vs. Chestnut Street Exchange
Performance |
Timeline |
Putnam Money Market |
Chestnut Street Exchange |
Putnam Money and Chestnut Street Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Money and Chestnut Street
The main advantage of trading using opposite Putnam Money and Chestnut Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Money position performs unexpectedly, Chestnut 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 Chestnut Street will offset losses from the drop in Chestnut Street's long position.Putnam Money vs. Vanguard Total Stock | Putnam Money vs. Vanguard 500 Index | Putnam Money vs. Vanguard Total Stock | Putnam Money vs. Vanguard Total Stock |
Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard 500 Index | Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard Total Stock |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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