Correlation Between Putnam Managed and RiverNorth Managed

Can any of the company-specific risk be diversified away by investing in both Putnam Managed and RiverNorth Managed 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 Managed and RiverNorth Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putnam Managed Municipal and RiverNorth Managed Duration, you can compare the effects of market volatilities on Putnam Managed and RiverNorth Managed 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 Managed with a short position of RiverNorth Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Managed and RiverNorth Managed.

Diversification Opportunities for Putnam Managed and RiverNorth Managed

0.64

Correlation Coefficient

Putnam Managed  RiverNorth Managed

Poor diversification

The 3 months correlation between Putnam and RiverNorth is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Managed Municipal and RiverNorth Managed Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Managed and Putnam Managed 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 Managed Municipal are associated (or correlated) with RiverNorth Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Managed has no effect on the direction of Putnam Managed i.e., Putnam Managed and RiverNorth Managed go up and down completely randomly.

Pair Corralation between Putnam Managed and RiverNorth Managed

Considering the 90-day investment horizon Putnam Managed Municipal is expected to generate 1.03 times more return on investment than RiverNorth Managed. However, Putnam Managed is 1.03 times more volatile than RiverNorth Managed Duration. It trades about -0.18 of its potential returns per unit of risk. RiverNorth Managed Duration is currently generating about -0.2 per unit of risk. If you would invest  640.00  in Putnam Managed Municipal on August 15, 2024 and sell it today you would lose (18.00) from holding Putnam Managed Municipal or give up 2.81% of portfolio value over 90 days.

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

Putnam Managed Municipal  vs.  RiverNorth Managed Duration

Putnam Managed Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Managed Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Putnam Managed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

RiverNorth Managed

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Managed Duration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, RiverNorth Managed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam Managed and RiverNorth Managed

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

The idea behind Putnam Managed Municipal and RiverNorth Managed Duration 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.