Correlation Between Alger Small and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both Alger Small and Putnam Growth 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 Alger Small and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Small Cap and Putnam Growth Opportunities, you can compare the effects of market volatilities on Alger Small and Putnam Growth 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 Alger Small with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Putnam Growth.
Diversification Opportunities for Alger Small and Putnam Growth
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Putnam is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport and Alger Small 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 Alger Small Cap are associated (or correlated) with Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of Alger Small i.e., Alger Small and Putnam Growth go up and down completely randomly.
Pair Corralation between Alger Small and Putnam Growth
Assuming the 90 days horizon Alger Small Cap is expected to generate 1.27 times more return on investment than Putnam Growth. However, Alger Small is 1.27 times more volatile than Putnam Growth Opportunities. It trades about 0.1 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about 0.09 per unit of risk. If you would invest 1,515 in Alger Small Cap on September 1, 2024 and sell it today you would earn a total of 291.00 from holding Alger Small Cap or generate 19.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Putnam Growth Opportunities
Performance |
| Timeline |
| Alger Small Cap |
| Putnam Growth Opport |
Alger Small and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Putnam Growth
The main advantage of trading using opposite Alger Small and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Putnam Growth 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 Growth will offset losses from the drop in Putnam Growth's long position.| Alger Small vs. Pace High Yield | Alger Small vs. Needham Aggressive Growth | Alger Small vs. Ab High Income | Alger Small vs. T Rowe Price |
| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Multi Cap Growth | Putnam Growth vs. Putnam Global Health | Putnam Growth vs. Putnam International Equity |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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