Correlation Between Putnam Money and California Municipal

Can any of the company-specific risk be diversified away by investing in both Putnam Money and California Municipal 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 California Municipal 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 California Municipal Portfolio, you can compare the effects of market volatilities on Putnam Money and California Municipal 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 California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Money and California Municipal.

Diversification Opportunities for Putnam Money and California Municipal

0.19

Correlation Coefficient

Putnam Money  California Municipal

Average diversification

The 3 months correlation between Putnam and California is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Money Market and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal 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 California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Putnam Money i.e., Putnam Money and California Municipal go up and down completely randomly.

Pair Corralation between Putnam Money and California Municipal

If you would invest  1,359  in California Municipal Portfolio on May 6, 2025 and sell it today you would earn a total of  16.00  from holding California Municipal Portfolio or generate 1.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Putnam Money Market  vs.  California Municipal Portfolio

Putnam Money Market

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Money Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

California Municipal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in California Municipal Portfolio are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, California Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam Money and California Municipal

The main advantage of trading using opposite Putnam Money and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Money position performs unexpectedly, California Municipal 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 California Municipal will offset losses from the drop in California Municipal's long position.

The idea behind Putnam Money Market and California Municipal Portfolio 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.