Correlation Between Ford and Putnam Small
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Putnam Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Putnam Small Cap, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Putnam Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Putnam Small.
Diversification Opportunities for Ford and Putnam Small
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Putnam Small go up and down completely randomly.
Pair Corralation between Ford and Putnam Small
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Putnam Small. In addition to that, Ford is 1.87 times more volatile than Putnam Small Cap. It trades about 0.0 of its total potential returns per unit of risk. Putnam Small Cap is currently generating about 0.09 per unit of volatility. If you would invest 1,656 in Putnam Small Cap on September 3, 2024 and sell it today you would earn a total of 264.00 from holding Putnam Small Cap or generate 15.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Putnam Small Cap
Performance |
| Timeline |
| Ford Motor |
| Putnam Small Cap |
Ford and Putnam Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Putnam Small
The main advantage of trading using opposite Ford and Putnam Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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