Correlation Between American Mutual and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both American Mutual and Putnam Equity 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 Mutual and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and Putnam Equity Income, you can compare the effects of market volatilities on American Mutual and Putnam Equity 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 Mutual with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Putnam Equity.
Diversification Opportunities for American Mutual and Putnam Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Putnam is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and American Mutual 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 Mutual Fund are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of American Mutual i.e., American Mutual and Putnam Equity go up and down completely randomly.
Pair Corralation between American Mutual and Putnam Equity
Assuming the 90 days horizon American Mutual Fund is expected to generate 0.8 times more return on investment than Putnam Equity. However, American Mutual Fund is 1.25 times less risky than Putnam Equity. It trades about 0.08 of its potential returns per unit of risk. Putnam Equity Income is currently generating about -0.1 per unit of risk. If you would invest 5,740 in American Mutual Fund on November 27, 2024 and sell it today you would earn a total of 40.00 from holding American Mutual Fund or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Putnam Equity Income
Performance |
| Timeline |
| American Mutual |
| Putnam Equity Income |
American Mutual and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Putnam Equity
The main advantage of trading using opposite American Mutual and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Putnam Equity 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 Putnam Equity will offset losses from the drop in Putnam Equity's long position.| American Mutual vs. Voya Solution Conservative | American Mutual vs. Lord Abbett Diversified | American Mutual vs. Massmutual Premier Diversified | American Mutual vs. Aqr Diversified Arbitrage |
| Putnam Equity vs. Old Westbury Short Term | Putnam Equity vs. Transamerica Short Term Bond | Putnam Equity vs. Barings Active Short | Putnam Equity vs. Calvert Short Duration |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |