Correlation Between Fidelity Small and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Putnam Equity 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 Fidelity Small and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Putnam Equity Income, you can compare the effects of market volatilities on Fidelity Small and Putnam Equity 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 Fidelity Small with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Putnam Equity.
Diversification Opportunities for Fidelity Small and Putnam Equity
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Putnam is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Fidelity Small 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 Fidelity Small Cap are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Fidelity Small i.e., Fidelity Small and Putnam Equity go up and down completely randomly.
Pair Corralation between Fidelity Small and Putnam Equity
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.99 times more return on investment than Putnam Equity. However, Fidelity Small is 1.99 times more volatile than Putnam Equity Income. It trades about 0.1 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.14 per unit of risk. If you would invest 2,879 in Fidelity Small Cap on September 1, 2024 and sell it today you would earn a total of 507.00 from holding Fidelity Small Cap or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Putnam Equity Income
Performance |
| Timeline |
| Fidelity Small Cap |
| Putnam Equity Income |
Fidelity Small and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Putnam Equity
The main advantage of trading using opposite Fidelity Small and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Advisor Mid | Fidelity Small vs. Fidelity Advisor Health | Fidelity Small vs. Fidelity Advisor International |
| Putnam Equity vs. Putnam Growth Opportunities | Putnam Equity vs. Putnam International Equity | Putnam Equity vs. George Putnam Fund | Putnam Equity vs. Putnam Multi Cap Growth |
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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