Correlation Between Baron Emerging and Putnam Small
Can any of the company-specific risk be diversified away by investing in both Baron Emerging and Putnam Small 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 Baron Emerging and Putnam Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Emerging Markets and Putnam Small Cap, you can compare the effects of market volatilities on Baron Emerging and Putnam Small 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 Baron Emerging with a short position of Putnam Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and Putnam Small.
Diversification Opportunities for Baron Emerging and Putnam Small
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baron and Putnam is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and Putnam Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Small Cap and Baron Emerging 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 Baron Emerging Markets are associated (or correlated) with Putnam Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Small Cap has no effect on the direction of Baron Emerging i.e., Baron Emerging and Putnam Small go up and down completely randomly.
Pair Corralation between Baron Emerging and Putnam Small
Assuming the 90 days horizon Baron Emerging is expected to generate 2.99 times less return on investment than Putnam Small. But when comparing it to its historical volatility, Baron Emerging Markets is 1.32 times less risky than Putnam Small. It trades about 0.04 of its potential returns per unit of risk. Putnam Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,055 in Putnam Small Cap on September 2, 2024 and sell it today you would earn a total of 2,420 from holding Putnam Small Cap or generate 59.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Emerging Markets vs. Putnam Small Cap
Performance |
| Timeline |
| Baron Emerging Markets |
| Putnam Small Cap |
Baron Emerging and Putnam Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Emerging and Putnam Small
The main advantage of trading using opposite Baron Emerging and Putnam Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Emerging position performs unexpectedly, Putnam Small 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 Small will offset losses from the drop in Putnam Small's long position.| Baron Emerging vs. Eaton Vance Income | Baron Emerging vs. Baird Aggregate Bond | Baron Emerging vs. Champlain Small | Baron Emerging vs. Mfs Emerging Markets |
| Putnam Small vs. Putnam Equity Income | Putnam Small vs. Putnam Tax Exempt | Putnam Small vs. Putnam Floating Rate | Putnam Small 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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