Correlation Between Growth Fund and Putnam Multi-cap
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Putnam Multi-cap 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 Multi-cap 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 Multi Cap Growth, you can compare the effects of market volatilities on Growth Fund and Putnam Multi-cap 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 Multi-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Putnam Multi-cap.
Diversification Opportunities for Growth Fund and Putnam Multi-cap
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growth and Putnam is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Putnam Multi Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap 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 Multi-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Growth Fund i.e., Growth Fund and Putnam Multi-cap go up and down completely randomly.
Pair Corralation between Growth Fund and Putnam Multi-cap
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.24 times more return on investment than Putnam Multi-cap. However, Growth Fund is 1.24 times more volatile than Putnam Multi Cap Growth. It trades about 0.09 of its potential returns per unit of risk. Putnam Multi Cap Growth is currently generating about 0.08 per unit of risk. If you would invest 5,331 in Growth Fund Of on September 3, 2024 and sell it today you would earn a total of 2,845 from holding Growth Fund Of or generate 53.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Putnam Multi Cap Growth
Performance |
| Timeline |
| Growth Fund |
| Putnam Multi Cap |
Growth Fund and Putnam Multi-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Putnam Multi-cap
The main advantage of trading using opposite Growth Fund and Putnam Multi-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Putnam Multi-cap 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 Multi-cap will offset losses from the drop in Putnam Multi-cap's long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. American Funds Fundamental | Growth Fund vs. Washington Mutual Investors |
| Putnam Multi-cap vs. American Funds The | Putnam Multi-cap vs. American Funds The | Putnam Multi-cap vs. Growth Fund Of | Putnam Multi-cap vs. Growth Fund Of |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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