Correlation Between American Balanced and George Putnam
Can any of the company-specific risk be diversified away by investing in both American Balanced and George Putnam 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 American Balanced and George Putnam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and George Putnam Fund, you can compare the effects of market volatilities on American Balanced and George Putnam 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 American Balanced with a short position of George Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and George Putnam.
Diversification Opportunities for American Balanced and George Putnam
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and GEORGE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and George Putnam Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam and American Balanced 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 American Balanced are associated (or correlated) with George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam has no effect on the direction of American Balanced i.e., American Balanced and George Putnam go up and down completely randomly.
Pair Corralation between American Balanced and George Putnam
Assuming the 90 days horizon American Balanced is expected to generate 1.11 times less return on investment than George Putnam. But when comparing it to its historical volatility, American Balanced is 1.09 times less risky than George Putnam. It trades about 0.1 of its potential returns per unit of risk. George Putnam Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,945 in George Putnam Fund on September 2, 2024 and sell it today you would earn a total of 662.00 from holding George Putnam Fund or generate 34.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. George Putnam Fund
Performance |
| Timeline |
| American Balanced |
| George Putnam |
American Balanced and George Putnam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and George Putnam
The main advantage of trading using opposite American Balanced and George Putnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, George Putnam 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 George Putnam will offset losses from the drop in George Putnam's long position.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| George Putnam vs. Putnam Equity Income | George Putnam vs. Putnam Tax Exempt | George Putnam vs. Putnam Floating Rate | George Putnam vs. Putnam High Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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