Correlation Between Growth Fund and Putnam High
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Putnam High 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 Growth Fund and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Putnam High Income, you can compare the effects of market volatilities on Growth Fund and Putnam High 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 Growth Fund with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Putnam High.
Diversification Opportunities for Growth Fund and Putnam High
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Putnam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Putnam High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Income and Growth Fund 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 Growth Fund Of are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Income has no effect on the direction of Growth Fund i.e., Growth Fund and Putnam High go up and down completely randomly.
Pair Corralation between Growth Fund and Putnam High
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.8 times more return on investment than Putnam High. However, Growth Fund is 1.8 times more volatile than Putnam High Income. It trades about 0.37 of its potential returns per unit of risk. Putnam High Income is currently generating about 0.25 per unit of risk. If you would invest 7,589 in Growth Fund Of on September 1, 2024 and sell it today you would earn a total of 511.00 from holding Growth Fund Of or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Putnam High Income
Performance |
| Timeline |
| Growth Fund |
| Putnam High Income |
Growth Fund and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Putnam High
The main advantage of trading using opposite Growth Fund and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Putnam High 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 High will offset losses from the drop in Putnam High's long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Washington Mutual Investors | Growth Fund vs. Capital World Growth | Growth Fund vs. American Balanced Fund |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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