Correlation Between Ab Select and Putnam Dynamic
Can any of the company-specific risk be diversified away by investing in both Ab Select and Putnam Dynamic 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 Ab Select and Putnam Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Equity and Putnam Dynamic Asset, you can compare the effects of market volatilities on Ab Select and Putnam Dynamic 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 Ab Select with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Putnam Dynamic.
Diversification Opportunities for Ab Select and Putnam Dynamic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AUUIX and Putnam is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and Putnam Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Dynamic Asset and Ab Select 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 Ab Select Equity are associated (or correlated) with Putnam Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Dynamic Asset has no effect on the direction of Ab Select i.e., Ab Select and Putnam Dynamic go up and down completely randomly.
Pair Corralation between Ab Select and Putnam Dynamic
Assuming the 90 days horizon Ab Select Equity is expected to generate 1.15 times more return on investment than Putnam Dynamic. However, Ab Select is 1.15 times more volatile than Putnam Dynamic Asset. It trades about 0.12 of its potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.12 per unit of risk. If you would invest 1,585 in Ab Select Equity on August 29, 2024 and sell it today you would earn a total of 821.00 from holding Ab Select Equity or generate 51.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Equity vs. Putnam Dynamic Asset
Performance |
| Timeline |
| Ab Select Equity |
| Putnam Dynamic Asset |
Ab Select and Putnam Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Putnam Dynamic
The main advantage of trading using opposite Ab Select and Putnam Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, Putnam Dynamic 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 Dynamic will offset losses from the drop in Putnam Dynamic's long position.| Ab Select vs. Financials Ultrasector Profund | Ab Select vs. Icon Financial Fund | Ab Select vs. Davis Financial Fund | Ab Select vs. Prudential Jennison Financial |
| Putnam Dynamic vs. Old Westbury Short Term | Putnam Dynamic vs. Quantitative Longshort Equity | Putnam Dynamic vs. Siit Ultra Short | Putnam Dynamic vs. Vanguard Short Term Federal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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