Correlation Between American Funds and Putnam Dynamic
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Putnam Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Putnam Dynamic Asset, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Putnam Dynamic.
Diversification Opportunities for American Funds and Putnam Dynamic
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Putnam is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American 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 American Funds 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 American Funds American 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 American Funds i.e., American Funds and Putnam Dynamic go up and down completely randomly.
Pair Corralation between American Funds and Putnam Dynamic
Assuming the 90 days horizon American Funds is expected to generate 1.22 times less return on investment than Putnam Dynamic. In addition to that, American Funds is 1.1 times more volatile than Putnam Dynamic Asset. It trades about 0.3 of its total potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.4 per unit of volatility. If you would invest 1,722 in Putnam Dynamic Asset on September 4, 2024 and sell it today you would earn a total of 66.00 from holding Putnam Dynamic Asset or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds American vs. Putnam Dynamic Asset
Performance |
| Timeline |
| American Funds American |
| Putnam Dynamic Asset |
American Funds and Putnam Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Putnam Dynamic
The main advantage of trading using opposite American Funds and Putnam Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Putnam Dynamic vs. Putnam Equity Income | Putnam Dynamic vs. Putnam Tax Exempt | Putnam Dynamic vs. Putnam Floating Rate | Putnam Dynamic 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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