Correlation Between Hartford Emerging and Putnam Dynamic
Can any of the company-specific risk be diversified away by investing in both Hartford Emerging 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 Hartford Emerging and Putnam Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Emerging and Putnam Dynamic Asset, you can compare the effects of market volatilities on Hartford Emerging 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 Hartford Emerging with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Emerging and Putnam Dynamic.
Diversification Opportunities for Hartford Emerging and Putnam Dynamic
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hartford and Putnam is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Emerging 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 Hartford Emerging 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 The Hartford Emerging 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 Hartford Emerging i.e., Hartford Emerging and Putnam Dynamic go up and down completely randomly.
Pair Corralation between Hartford Emerging and Putnam Dynamic
Assuming the 90 days horizon Hartford Emerging is expected to generate 2.77 times less return on investment than Putnam Dynamic. But when comparing it to its historical volatility, The Hartford Emerging is 1.15 times less risky than Putnam Dynamic. It trades about 0.05 of its potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Putnam Dynamic Asset on September 12, 2024 and sell it today you would earn a total of 489.00 from holding Putnam Dynamic Asset or generate 37.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Hartford Emerging vs. Putnam Dynamic Asset
Performance |
| Timeline |
| Hartford Emerging |
| Putnam Dynamic Asset |
Hartford Emerging and Putnam Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Emerging and Putnam Dynamic
The main advantage of trading using opposite Hartford Emerging and Putnam Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Emerging 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.The idea behind The Hartford Emerging and Putnam Dynamic Asset pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Putnam Dynamic vs. Putnam Multi Cap Growth | Putnam Dynamic vs. Putnam Multi Cap Growth | Putnam Dynamic vs. Putnam Sustainable Future | Putnam Dynamic vs. Putnam Equity Income |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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